Fannie Mae has mortgage rates falling in the first half of next year, while Freddie Mac forecasts an increase. In the meantime, rates didn’t move much this week and are likely to hold through next week. Jumbo borrowers, however, got a break.
Slipping just 1 basis point from last week, the average 30-year fixed-rate mortgage was 4.11 percent in Freddie’s survey for the week ended Oct. 20. The 30 year was 10 BPSÂ better than this week in 2010.
Based on U.S. Treasury Department data for the 10-year Treasury note, mortgage rates aren’t likely to be much different in next week’s report as things currently stand. The 10-year yielded 2.20 percent at today’s close versus 2.19 percent last Thursday.
A majority of Bankrate.com panelists for the week Oct. 20 to Oct. 26 shared that outlook and predicted that rates won’t move much over the next week or so. Just over a quarter forecasted a decline of at least 3 BPS, while a fifth expected an increase.
In its October 2011 Economic and Housing Market Outlook, Freddie predicted that the 30 year will average 4.0 percent in the fourth quarter then rise 20 BPS each quarter through the second-quarter 2013.
But Fannie’s Housing Forecast:Â October 2011 has the 30-year mortgage falling from 4.0 percent this quarter to 3.9 percent in both the first and second quarters of 2012.
The U.S. Mortgage Market Index report from Mortech Inc. and MortgageDaily.com for the week ended Oct. 14 indicated that jumbo borrowers paid a 67-basis-point premium over conforming borrowers, a big improvement from the 74-basis-point spread the previous week.
The average 15-year fixed-rate mortgage was up 1 basis point from last week’s survey from Freddie to 3.38 percent. Fifteen-year borrowers got less of a break this week, with the 15-year yield discounted by 73 BPS compared to the 30 year. Last week’s spread was 75 BPS.
A 5-basis-point decline was reported by Freddie from last week for the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage. The five-year averaged 3.01 percent.
The one-year Treasury-indexed ARM rose 4 BPS for the week to 2.94 percent. The one year was 3.30 percent during this week in 2010.
Freddie expects the one year to average 2.9 percent this quarter and rise 10 BPS each quarter through mid-2013. Fannie, on the other hand, sees the ARM moving from 2.8 percent this quarter to 2.7 percent in the first half of next year then back up to 2.8 percent in the second-half 2012.
The one-year Treasury note yield climbed to 0.12 percent today from 0.11 percent last Thursday, according to Treasury Department data.
The six-month London Interbank Offered Rate, or LIBOR, climbed to 0.60 percent on Wednesday from 0.59 percent a week earlier, according to Bankrate.com.
The cost of funds for U.S. thrifts was 1.18 percent in the second quarter, based on the Cost of Funds Report recently released by the Office of the Comptroller of the Currency. The cost was down from 1.24 percent in the first quarter and from 1.53 percent in the second quarter of last year.
The Mortgage Market Index report indicated that the ARM share of loan inquiries was 5.89 percent, higher than 4.94 percent a week prior.
Fannie projects that ARMs will account for 5 percent of fourth-quarter applications then sit at 4 percent all of next year. Freddie predicts that ARM share will be 11 percent of closed production this quarter then spend the first nine months of 2012 at 12 percent.
