One short-term outlook has fixed mortgage rates drifting lower over the next week, while a longer-term forecast has them frozen for the entire year.
In the week that ended on Feb. 18, Freddie Mac reported in its Primary Mortgage Market Survey that 30-year fixed rates averaged 3.65 percent.
Although 30-year
fixed mortgage rates were no different that seven days earlier, they were down 11 basis points compared to the same week last year.
Thirty-year fixed rates averaged 4.30 percent on home loans closed during January, according to the Origination Insight Report January 2016 from Ellie Mae Inc. The 30 year inched up from 4.26 percent in December.
On conventional mortgages, Ellie said 30-year fixed rates averaged 4.37 percent last month, while the average was 4.25 percent on loans insured by the Federal Housing Administration and 4.06 percent on mortgages guaranteed by the Department of Veterans Affairs.
Rates have worsened slightly since Freddie conducted its survey, according to MBSQuoteline Director Joe Farr.
“MBS prices have been on a roller coaster since the last survey was conducted,” Farr said in a written statement. “First rising, then falling and then rising again The fall in price has been greater than the rise, so mortgage rates as of the 18th are actually a little higher than the survey shows.”
Fixed rates might be around three or so BPS lower in Freddie’s next survey, according to a Treasury market analysis by Mortgage Daily.
Eighty-four percent of panelists surveyed by Bankrate.com for the week Feb. 18 to Feb. 24 were evenly split over whether rates would move up at least three BPS over the next week or stay where they are. Just 16 percent forecasted a decline.
Also predicting a slight increase was Bankrate.com Chief Financial Analyst Greg McBride.
“Mortgage rates will continue to yo-yo up and down as economic uncertainty and market volatility gets sorted out,” McBride said in a written statement to Mortgage Daily.
Fannie Mae projected in its Housing Forecast: February 2016 that 30-year fixed rates will average 3.8 percent during all four quarters of this year.
Interest rates on jumbo mortgages were 14 BPS less than on conforming loans in the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Feb. 12. The jumbo-conforming spread thinned from a negative 20 BPS a week prior.
Fifteen-year fixed rates averaged
2.95 percent in Freddie’s survey, the same as in the week ended Feb. 11. The spread between 15- and 30-year rates was 70 BPS, also unchanged from the last report.
Ellie reported that 15-year mortgages accounted for 11.1 percent of January’s originations. The share widened from 10.8 percent in the final month of last year.
Freddie’s survey said that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.85 in the latest report, two BPS more than a week earlier.
In Fannie’s forecast, hybrid ARMs are expected to average 2.9 percent in the first quarter and 3.0 percent during the following two quarters.
One-year ARMs averaged 2.49 percent in HSH.com’s report for the week ended Feb. 16, up from 2.33 percent previously reported for the prior week. In the week ended Feb. 19, 2015, Freddie previously reported that one-year ARMs averaged 2.45 percent.
Fannie has one-year ARMs averaging 2.6 percent in the first half of this year then rising to 2.7 percent in the second half.
Changes to rates on one-year ARMs are based on the one-year Treasury yield, which the Treasury Department reported closed at 0.53 percent
Thursday, surging from 0.47 percent seven days earlier.
At 0.87 percent as of Wednesday, the six-month London Interbank Offered Rate — which is also utilized as an ARM index — was
the same as one week previous, according to Bankrate.com.
ARMs accounted for 8.5 percent of all rate locks tracked in the latest Mortgage Market Index report, widening from 6.3 percent in the previous report.
On closed loans, ARM share was 5.3 percent in January, the same as in December, according to Ellie.
