Interest rates on home loans slipped this week and stand very near their all-time lows. More of the same is likely in next week’s report based on Treasury market activity.
In the Primary Mortgage Market Survey for the week ended Nov. 1, Freddie Mac reported that the average 30-year, fixed-rate mortgage fell to 3.39 percent from 3.41 percent a week earlier. The 30 year averaged 4.00 percent in the same week last year.
Freddie’s chief economist, Frank Nothaft, noted that signs of a growing economy and low inflation kept mortgage rates in check.
“The economy grew 2.0 percent in the third quarter with residential fixed investment contributing 0.3 percentage points to growth,” Nothaft stated in the report. “The core price index of personal consumer expenditures grew 1.7 percent between September 2011 and 2012 and was within the Federal Reserve’s preferred target range.”
The Federal Housing Finance Agency, which regulates Freddie and its secondary cousin Fannie Mae, reported that the 30-year mortgage was 3.76 percent in September, 2 basis points more than in August.
Data reported by the Department of the Treasury indicates that mortgage rates should be about the same in next week’s report. The yield on the 10-year Treasury note averaged 1.74 percent during the days that Freddie surveyed lenders for this week’s report, the same as it closed at today.
Panelists surveyed by Bankrate.com for the week Nov. 1 to Nov. 7 were mixed about where rates are headed over the next week; 39 percent predicted a decline of at least 3 BPS, another 39 percent foresaw no changes ahead, and just 22 percent predicted an uptick.
Jumbo mortgage premiums improved slightly to 67 BPS in the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended Oct. 26 from a 68-basis-point jumbo-conforming spread in the prior report.
Freddie reported the average 15-year mortgage at 2.70 percent in its latest survey, off from 2.72 percent in the week ended Oct. 25. The discount for a 15-year mortgage was unchanged from the previous week at 69 BPS.
At 2.74 percent, the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage averaged 1 basis point less than in Freddie’s prior report.
A 1-basis-point decline from last week was also reported by Freddie for the one-year, Treasury-indexed ARM, which averaged 2.58 percent. The one year was 2.88 percent in the week ended Nov. 3, 2011.
There was a 1-basis-point decline from last week for the yield on the one-year Treasury note, which the Department of the Treasury said closed Thursday at 0.18 percent. The one-year yield is used to determine rate and payment changes on one-year ARMs.
Another ARM index, the six-month London Interbank Offered Rate, was 0.54 percent as of Wednesday, according to Bankrate.com. LIBOR was 0.55 percent seven days earlier.
ARM share edged up to 2.5 percent in the latest Mortgage Market Index report from 2.4 percent in the prior week’s report.
