For the three weeks in a row, interest rates on residential loans have risen, and another ascension could be in the offing.
Thirty-year
fixed rates averaged 3.80 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday.
Long-term fixed-rates rose from the prior week’s survey, when the 30-year averaged 3.76 percent. It was the third week in a row that rates inflated.
But the average remains well below 4.37 percent as of a year previous.
“Mortgage rates rose for the third consecutive week in February following solid housing data,” Freddie Mac Deputy Chief Economist Len Kiefer said in the report. “New home sales beat market expectations at an annual pace of 481,000 units, down slightly from 482,000 units in December, but up 5.3 percent from a year ago. Also, the S&P/Case-Shiller National House Price Index rose 4.6 percent over the 12-months ending in December 2014.”
Data as of the close of the market Thursday from MBSQuoteline indicates that mortgage rates had fallen around 3 BPS since Freddie’s report.
Mortgage Daily’s analysis of Treasury market activity points to a roughly three-basis-point rise in fixed rates come Freddie’s next survey.
But more than two-thirds of panelists surveyed for Bankrate.com’s Mortgage Rate Trend Index for the week Feb. 26 to March 4 predicted mortgage rates will decline at least 3 BPS over the following week. A quarter called for no change, and just 8 percent forecast a rise.
Fannie Mae predicts in its Housing Forecast: February 2015 that 30-year rates will average 3.7 percent in the first quarter, then rise to 3.8 percent in the second quarter and 3.9 percent in the third quarter.
The Mortgage Bankers Association also predicts rates will average 3.7
in the first quarter, according to its MBA Mortgage Finance Forecast for February. But the trade group sees a more sharp subsequent rise, with 4.0 percent expected in the second quarter and 4.4 percent projected for the third quarter.
In the the U.S. Mortgage Market Index report from LoanSifter/Optimal Blue and Mortgage Daily for the week ended Feb. 20, interest rates on jumbo mortgages were 14 BPS higher than on their conforming counterparts. The jumbo-conforming spread narrowed from 21 BPS a week prior.
Freddie said 15-year fixed rates were up just 2 BPS from the week ended Feb. 19 to 3.07 percent in the latest survey. Fifteen-year loans were priced 73 BPS better than 30-year loans. The spread widened from 71 BPS in the previous report.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages were
2.99 percent, up 2 BPS from the last report, according to Freddie.
Fannie expects hybrid ARMs to average 2.9 this quarter then rise 1 basis point each of the following two quarters.
At 2.44 percent, one-year Treasury-indexed ARMs averaged 1 basis point less than a week earlier. One-year ARMs were also lower than 2.52 percent in the week ended Feb. 27, 2014.
One-year ARMs are forecasted by Fannie to rise from 2.4 percent in the first quarter to 2.5 percent three months later and 2.7 percent six months later.
The one-year Treasury yield, which determines rate adjustments on one-year ARMs,
was 0.22 percent as of Thursday, Treasury Department data indicate, 1 basis point less than seven days prior.
There was no week-over-week, change in the six-month London Interbank Offered Rate, or LIBOR, which Bankrate.com reported at 0.38 percent as of Wednesday.
ARM share was mostly unchanged from the previous week at 8.6 percent in the latest Mortgage
Market Index report.
Fannie expects ARM share of loan applications to reside at 7 percent each quarter of this year and all of next year.
