Borrowers got a break this week when mortgage rates fell and broke prior records. But this week’s improvement is looking like it will be wiped out in next week’s report.
A 3-basis-point improvement was reported by Freddie Mac for the 30-year fixed rate, which averaged 4.09 percent in the Primary Mortgage Market Survey for the week ended Sept. 15. It was a new record low for the long-term mortgage.
“Continued investor concerns over the state of the European debt markets kept U.S. Treasury bond yields low and allowed mortgage rates to ease once more this week,” Frank Nothaft, Freddie’s chief economist, said in the report.
A week earlier the 30 year was 4.12 percent. A year earlier it stood at 4.37 percent.
The 30 year looks to be headed higher by next week’s report based on Treasury activity. The yield on the 10-year Treasury note closed today at 2.09 percent, climbing from 2.00 percent last Thursday according to Department of the Treasury data. The 9-basis-point rise in the face of a 3-basis-point decline in mortgage rates indicates mortgages could be 5 to 10 BPSÂ worse next week.
But a majority of panelists surveyed by Bankrate.com for the week Sept. 15 to Sept. 21 don’t see any changes ahead for mortgage rates. More than a quarter predicted a decline of at least 3 BPS during the next week or so, and only 18 percent forecasted a rise.
The third-quarter average for the 30-year fixed-rate mortgage is projected by the Mortgage Bankers Association to be 4.4 percent, then rise each quarter until the third quarter of next year, when it peaks at 5.0 percent.
Jumbo 30-year loans were priced at 62 BPS more than conforming mortgages in the U.S. Mortgage Market Index report for the week ended Sept. 9. The jumbo-conforming spread was better than 63Â BPS a week prior, based on the report from Mortech Inc. and MortgageDaily.com.
The 15-year fixed-rate mortgage, like the 30 year, was down 3 BPS from last week to 3.30 percent, according to Freddie’s survey. And, also like the 30 year, the 15-year fell to its lowest level on record. The parallel movement had the spread between the 15-year and 30-year unchanged from last week at 79 BPS.
The only loan product to increase from last week was the 5/1 adjustable-rate mortgage. The hybrid Treasury-indexed ARM rose to 2.99 percent from 2.96 percent.
But the one-year Treasury-indexed ARM fell 3 BPS to 2.81 percent. The one-year was 3.40 percent a year ago. Its underlying index edged down to 0.10 percent today from 0.12 percent seven days ago.
There was no change from last week for the six-month London Interbank Offered Rate, which Bankrate.com reported at 0.50 percent as of Wednesday.
The national monthly median cost of funds ratio for federally regulated thrifts was 1.31 percent in July, the Comptroller of the Currency reported. The rate, which is used to determine adjustments on some ARMs, was lower than 1.34 percent in August and has tumbled considerably from 1.74 percent in July 2010.
The share of mortgage inquiries that were for ARMs in the latest Mortgage Market Index was 6.7 percent, a little lower than 7.1 percent seven days earlier.
ARM share of loan originations is expected to teeter between 6 percent and 7 percent through the end of next year, MBA forecasted.
