A nice improvement was recorded this past week for interest rates on residential loans, and the forecast is for a further decline.
Fixed rates on 30-year loans averaged 4.20 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Jan. 5.
Thirty-year rates improved by 12 basis points compared to the previous week but worsened versus 3.97 percent as of year previous.
Curt Long, the chief economist for the National Association of Federally Insured Credit Unions, said in a written statement that while the
Federal Open Market Committee had been previously divided on the timing of the next rate hike, their statement issued Wednesday indicated that the primary source of dispute — or at least uncertainty — during their December meeting was the effects of a Trump presidency.
“As for the decision to raise rates in December, the committee was apparently of one accord,” Long continued. “As inflation begins to strengthen, though, it was notable that the committee stressed the need to respond with ‘timely adjustments to monetary policy’ and even suggested that the Fed could begin to draw down the size of its balance sheet if inflationary pressures build too quickly.”
MBSQuoteline Director Joe Farr said in a written statement to Mortgage Daily that prices of mortgage-backed securities have increased considerably since the FOMC released its meeting minutes.
“As a result, mortgage rates as of today have improved more than what the survey shows,” Farr said.
Mortgage Daily’s analysis of Treasury market activity suggests that fixed mortgage rates could be roughly 9 BPS lower in Freddie’s next survey.
However, a strong employment report tomorrow from the Department of Labor could send interest rates higher.
Thirty-six percent of panelists surveyed by Bankrate.com for the week Jan. 5 to Jan. 11 predicted that mortgage rates won’t move more than 2 BPS over the next week, while another 36 percent expected a decline. An increase was projected by 28 percent.
Interest rates on jumbo mortgages were
4 BPS lower than conforming rates, according to the the U.S  Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Dec. 30, 2016. The jumbo-conforming spread widened from 0.0 percent a week earlier.
In Freddie’s survey, 15-year fixed rates averaged 3.44 percent, 11 BPS better than in the week ended Dec. 29, 2016. Fifteen-year rates were
76 BPS lower than 30-year rates, cutting the spread from 77 BPS in the last report.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.33 percent this week, Freddie reported, worsening 3 BPS from one week earlier.
The index for hybrid ARMs, the yield on the one-year Treasury note, was reported by the Department of the Treasury at 0.83 percent as of Thursday,
2 BPS less than seven days earlier.
At 1.32 percent as of Wednesday, the six-month London Interbank Offered Rate was
no different than as of seven days earlier, according to Bankrate.com.
ARM share was 8.7 percent in the most-recent Mortgage Market Index report, thinning from 9.5 percent the previous week.
