Interest rates on residential loans turned modestly lower over the past week. But the next report is likely to reflect a significant surge in rates.
Home loans that were closed during December had an average 30-year note rate 4.05 percent, surging 24 basis points from the prior month.
But despite the month-over-month deterioration, 30-year mortgage rates have moved down 21 BPS compared to final month of 2015.
That was according to Ellie Mae Inc.’s December 2016
Origination Insight Report.
On just conventional loans, rates average 4.14 percent last month. They were lower on mortgages insured by the Federal Housing Administration, averaging 4.02 percent, and on loans guaranteed by the Department of Veterans Affairs, with a 3.76 percent average.
In Freddie Mac’s Primary Mortgage Market Survey for the week ended Jan. 19, thirty-year fixed rates averaged 4.09 percent. The average fell 3 BPS from the previous week but ascended 28 BPS from the same week in the previous year.
Joe Farr, director for MBSQuoteline, noted, however, that rates have deteriorated since Freddie conducted its survey.
“Since Tuesday, when many people submitted survey responses, MBS prices have fallen about 1 percent and, as a result, mortgage rates as of Thursday should actually show an increase,” Farr said in a written statement.
In Freddie’s next survey, fixed mortgage rates are likely to be around
9 BPS worse, according to an analysis of Treasury market activity by Mortgage Daily.
But most of the panelists surveyed by Bankrate.com for the week Jan. 19 to Jan. 25 disagreed with Mortgage Daily’s forecast, with 46 percent predicting that rates won’t move more than 2 BPS and 36 percent projecting a decline. Just 18 percent expected an increase.
In the
U.S Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Jan. 13, jumbo interest rates were 9 BPS less than conforming rates. The jumbo-conforming spread widened from a negative 4 BPS in the previous week.
Freddie reported that 15-year fixed rates averaged 3.34 percent, 3 BPS better than in the week ended Jan. 12.
The spread between 15- and 30-year mortgages was 75 BPS, the same as in the last survey.
At 3.21 percent, five-year, Treasury-indexed, hybrid, adjustable-rate mortgages were 2 BPS lower than in the prior report.
The yield on the one-year Treasury note, which serves as the
index for hybrid ARMs, closed Thursday at 0.83 percent, the Treasury Department reported. The one-year yield was 0.81 percent seven days earlier.
Another ARM index, the six-month London Interbank Offered Rate, was 1.33 percent as of Wednesday, unchanged from one week previous, according to Bankrate.com.
ARMs made up 4.6 percent of all loans closed in December, according to Ellie Mae, more than the 3.9 percent share in November. But ARM share has dwindled from 5.3 percent in December 2015.
More recently, ARMs accounted for 7.7 percent of all rate locks tracked in the latest Mortgage Market Index report, modestly wider than 7.6 percent the previous week.
