Based on Treasury market activity and current pricing inquiries, 30-year mortgage rates should be sitting well below record levels. But Freddie Mac’s latest weekly report reflects no such standing.
While the yield on the 10-year fell 47 basis points between Wednesday, Aug. 3, and yesterday, the average 30-year fixed-rate mortgage in Freddie Mac’s survey of 125 mortgage bankers for the week ended Thursday was 4.32 percent — down only 7 BPS from a week earlier.
The 40-basis-point disparity contrasts current mortgage pricing quotes — which yesterday had the 30 year at less than 4 percent. The record for the 30 year was reached in the week ended Nov. 11, 2010, when it averaged 4.17 percent.
The 30-year mortgage was 4.44 percent a year earlier, Freddie reported.
Based on today’s 10-year yield of around 2.28 percent, the 30-year mortgage is likely to come in around a 15 to 30 BPS better in Freddie’s next report.
Bankrate.com panelists were undecided about the direction of mortgage rates during the next week. A decline at least 3 BPS was expected by 36 percent of the panelists for the week Aug. 11 to Aug. 17, while the same share predicted no changes and 28 percent forecast an increase.
The spread between the jumbo 30-year mortgage and the conforming 30 year widened to 47 BPS in the U.S. Mortgage Market Index report for the week ended Aug. 8 from Mortech Inc. and MortgageDaily.com from 43 BPS a week earlier.
The report from Freddie indicated that the average 15-year fixed-rate mortgage fell 4 BPS from the prior week to 3.50 percent. The spread between the 15-year and the 30-year was trimmed to 82 BPS from 85 BPS in the previous survey — making the shorter-term loan less attractive.
The five-year, Treasury-indexed, hybrid, adjustable-rate mortgage came in at 3.13 percent in Freddie’s survey, 5 BPS better than seven days earlier.
With a 13-basis-point weekly improvement, the one-year Treasury-indexed ARM was 2.89 percent in Freddie’s report. The one-year averaged 3.53 percent during the same week in 2010.
The index on the one-year ARM, the yield on the one-year Treasury, fell to 0.09 percent Wednesday from 0.16 percent a week earlier.
The six-month London Interbank Offered Rate continued its ascent, edging up to 0.45 percent Wednesday from 0.44 percent the previous week, Bankrate.com reported.
The growing attractiveness of fixed rates had ARM share falling to 8.66 percent in the Mortgage Market Index report from 11.01 percent the prior week.
