Fannie Mae predicts fixed rates will stay near where they are now through next year, while Freddie Mac has them increasing. Fannie also expects the one-year adjustable-rate mortgage to remain at its current level for a while, and Freddie predicts a decline. ARM share is headed higher, according to Fannie, though Freddie sees no near-term changes. Meanwhile, the two secondary lenders also disagree about whether refinance share will rise or fall.
Edging up 0.02 percent from last week’s record low, the average 30-year fixed-rate mortgage was 4.37 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday. The 30-year was 5.04 percent during the same week last year.
In its economic forecast released this week, Freddie predicted that the 30-year will average 4.4 percent this quarter then steadily increase each quarter — reaching 5.1 percent by the end of next year. Rival Fannie Mae also predicted that the 30-year would average will be 4.4 percent this quarter, though Fannie’s outlook had the 30-year falling to 4.2 percent in the fourth quarter — where it is expected to stay most of next year.
The 30-year is unlikely to move much by the next set of reports based on the yield of the 10-year Treasury, which was unchanged from last week at 2.77 percent today, according to data reported by the U.S. Department of the Treasury.
The rate on the jumbo 30-year was 5.36 percent in the Mortech-Mortgage Daily Mortgage Market Index report for the week ended Wednesday, 12 BPS worse than last week. At the same time, the conventional 30-year was up just 5 BPS — causing the jumbo-conventional spread to widen by 7 BPS to 98 BPS.
The average 15-year fixed-rate mortgage managed a small decline, edging down to 3.82 percent from 3.83 percent a week earlier, Freddie reported.
Also down 1 basis point for the week was the five-year Treasury-indexed hybrid ARM which Freddie quoted at 3.55 percent.
A more impressive showing was turned in by the one-year Treasury-indexed ARM, which tumbled 6 BPS in Freddie’s survey to 3.40 percent. The one-year averaged 4.58 percent a year ago. Freddie projected that the one-year will average 3.5 percent in the third and fourth quarters, while Fannie has the one-year falling from 3.6 percent to 3.3 percent in the fourth quarter.
The one-year ARM index — the yield on the one-year Treasury — closed today at 0.25 percent, 0.01 percent lower than last Thursday. The yield on another ARM index, the six-month London Interbank Offered Rate, closed at 0.48 percent yesterday, 1 basis point below last week.
ARMs accounted for 6.2 percent of activity in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Sept. 10, up marginally from 6.1 percent the week before..
In Freddie’s forecast, ARM share of originations is expected to be 6 percent throughout the entire second half of this year. Fannie said ARM share will move from the third quarter’s 5.6 percent to 6.1 percent in the next quarter.
The Mortgage Market Index rose to 304 this week from last week’s 259. The index reflects new loan activity at mortgage brokerages.
The average loan amount in the Mortech-Mortgage Daily report was $211,313, higher than $210,537 in the prior report. Washington, D.C.’s, $281,205 average was more than any state this week, and North Dakota’s $113,322 was the lowest.
Refinances represented 61 percent of activity in the Mortgage Market Index report, slightly higher than 60 percent last week. This week’s share included a 45 percent rate-term share and a 16 percent cashout share.
Freddie has the refinance share — including mortgage banker applications — averaging 75 percent this quarter then falling to 65 percent in the fourth quarter.
But Fannie projected that the refinance share will climb from 64 percent this quarter to 76 percent.
