Although interest rates on single-family loans jumped to the highest level in seven years, one short-term forecast has them retreating in the upcoming week. But long-term forecasts call for further escalation.
Thirty-year fixed rates averaged 4.66 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended May 24.
Based on historical data from the secondary lender, the last time long-term mortgage rates were this high was in the week ended
May 5, 2011, when the average was 4.71 percent.
Average 30-year rates were 4.61 percent in Freddie’s report last week and 3.95 percent in the same week a year ago.
“Mortgage rates so far in 2018 have had the most sustained increase to start the year in over 40 years,” Freddie Mac Chief Economist Sam Khater said in the report. “Through May, rates have risen in 15 out of the first 21 weeks (71 percent), which is the highest share since Freddie Mac began tracking this data for a full year in 1972.”
Mortgage Daily’s analysis of Treasury market activity indicates that fixed mortgages rates could be approximately 6 BPS lower in next week’s survey from Freddie.
Forty-five percent of panelists surveyed by Bankrate.com for the week May 23 to May 29 predicted mortgage rates will rise at least 3 BPS over the next week. The remaining 54 percent were evenly split over whether rates would decline or stay where they currently reside.
On a longer-term basis, Freddie predicted in its May 2018 Economic & Housing Market Forecast that 30-year fixed rates will ascend from 4.6 percent this quarter to 4.7 percent in the third quarter and 4.9 percent in the final-three months of 2018.
While the
Mortgage Bankers Association agrees with Freddie about the second-quarter average, its latest MBA Mortgage Finance Forecast has the 30 year rising to 4.8 percent three months later and 5.0 percent in the fourth quarter.
In the U.S. Mortgage Market Index report from Mortgage Daily  and OpenClose for the week ended May 18, jumbo rates were 17 BPS higher than conforming rates, the same as one week earlier.
Freddie reported that average 15-year fixed rates jumped to 4.15 percent from 4.08 percent in the week ended May 17. At the same time,
the spread between 15- and 30-year rates thinned to 51 BPS from 53 BPS.
A 5-basis-point ascension from the preceding week left average rates for five-year, Treasury-indexed, hybrid adjustable-rate mortgages at 3.87 percent in Freddie’s survey.
Freddie predicts hybrid ARMs will average 4.0 percent in the current quarter, 4.2 percent three months later and 4.4 percent in the fourth quarter.
The yield on the one-year Treasury note, which determines rate adjustments for hybrid ARMs, closed Thursday at 2.28 percent, down 4 BPS from seven days earlier, according to Treasury Department data.
At 2.50 percent as of Wednesday, the six-month London Interbank Offered Rate crept up a basis point from the previous Wednesday, Bankrate.com reported.
The Secured Overnight Financing Rate, which is replacing LIBOR, was reported by the Federal Reserve Bank of New York at 1.67 percent as of Wednesday, tumbling from 1.75 percent seven days sooner.
The most-recent Mortgage Market Index report had ARM share at 16.7 percent, widening from 15.8 percent the previous seven-day period.
