Fixed rates fell to their lowest levels so far in 2011 and don’t appear headed higher over the next week, though adjustable-rate products climbed. The longer-term outlook is for rates to rise another half percent by the end of the year.
At 4.61 percent, the average 30-year fixed-rate mortgage was down for the fifth straight week to the lowest level all year, according to Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday. The 30-year was 4.63 percent a week earlier and 4.84 percent a year earlier.
At this point it looks like the 30-year won’t be much different in next week’s report, with the yield on the 10-year Treasury easing to 3.17 percent today from 3.22 percent seven days prior based on data delivered by the Department of the Treasury.
No change in mortgage rates was predicted by 44 percent of the panelists surveyed by Bankrate.com for the week May 19 to May 25. But 39 percent projected an increase of at least 3 BPS and 17 percent saw rates heading lower during the next week.
Freddie predicted in its latest housing forecast that the 30-year will average 4.8 percent this quarter then rise 10 BPS in the third quarter and another 20 BPS in the fourth quarter. A projection for the 30-year from the Mortgage Bankers Association Wednesday wasn’t much different.
The spread between the jumbo 30-year and the conforming 30-year inched down to 52 BPS in the U.S. Mortgage Market Index report from Mortech Inc. and MortgageDaily.com for the week ended May 13 from 53 BPS a week earlier.
The average 15-year fixed-rate mortgage was down 2 basis points from last week to 3.82 percent, Freddie reported. There was no change in the 81-basis-point spread between the 15-year and the 30-year.
But adjustable-rate mortgages were higher this week in Freddie’s report. The five-year, Treasury-index, hybrid ARM rose 7 BPS from last week to 3.48 percent.
Freddie said that the one-year Treasury-indexed ARM averaged 3.15 this week, up from 3.11 percent in the previous survey. The one-year was 4.00 percent a year ago. The secondary lender forecasts that the one-year ARM will be 3.2 percent in both the second and third quarter then edge up a basis point.
At 0.19 percent, the yield on the one-year Treasury was just a basis point higher than Thursday of last week, according to the Treasury Department. A one-basis-point decline from last Wednesday was recorded for the six-month London Interbank Offered Rate, which Bankrate.com reported at 0.41 percent.
The ratio of new inquiries in the Mortgage Market Index report that were ARMs fell to 9.73 percent from last week’s 10.45 percent.
Based on Freddie’s outlook, ARM share of originations will fall to 6 percent from the first quarter’s 8 percent then inch back up to 8 percent by the end of the year. MBA has ARM share at 7 percent for the entire year.
The Mortgage Market Index report indicated that refinance share climbed to half from last week’s 47 percent.
Refinance share of loan applications is estimated by Freddie to come in at 60 percent this quarter, half in the third quarter and just over a third in the final three months of this year. MBA predicted refinance share will fall from the second quarter’s 60 percent share to half. Fourth-quarter share is pegged at less than a third.
