Better-than-expected news about the nation’s workforce thrust fixed mortgage rates higher this past week, though a subsequent retreat is likely.
Thirty-year fixed rates averaged 3.86 percent this week, according to Freddie Mac’s Primary Mortgage Market Survey for the week ended March 12.
The average leapt from a week earlier, when it stood at 3.75 percent, but was down from 4.37 percent in the same week last year.
Rates rose on a strong employment report, according to Freddie Mac Deputy Chief Economist Len Kiefer.
An analysis of Treasury market activity by Mortgage Daily suggests fixed rates could be approximately 5 BPS lower in next week’s report.
Bankrate.com panelists surveyed for the week March 12 to March 18 offered little insight into where rates are headed over the next week. A decline of at least 3 BPS was predicted by 38 percent, while the rest were evenly split over whether rates would rise or stay where they are now.
In its
March 2015 Economic and Housing Market Outlook, Freddie predicted that 30-year fixed rates will average of 3.7 percent in the first quarter then climb 20 BPS each quarter thereafter through mid-2016.
Interest rates on jumbo mortgages
were 13 BPS higher than on conforming loans in the U.S. Mortgage Market Index report from LoanSifter/Optimal Blue and Mortgage Daily for the week ended March 6. The jumbo-conforming spread widened from 10 BPS in the prior report.
At 3.10 percent, 15-year fixed rates
were 7 BPS worse than in Freddie’s survey for the week ended March 5. The spread between 15- and 30-year mortgages expanded to 76 BPS from 72 BPS in the previous report.
Freddie said that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.01 percent, 5 BPS higher than seven days prior. Freddie expects hybrid ARMs to average 2.8 percent in the current quarter, 2.9 percent in the second quarter and 3.2 percent three months later.
A 2-basis-point week-over-week increase left one-year Treasury-indexed ARMs averaging 2.46 percent in Freddie’s survey. The one year averaged 2.48 percent in the week ended March 13, 2014.
One-year ARMs will average 2.5 percent in the first quarter of this year, 2.4 percent in the following three-month period and 2.5 in the third quarter, Freddie’s outlook said.
The yield on the one-year Treasury note, which determines the degree of rate changes on the one-year ARM, was 0.24 percent Thursday, according to data from the Department of the Treasury, off from 0.25 percent seven days prior.
While the one-year Treasury yield was lower, another ARM index — the six-month London Interbank Offered Rate — rose 2 BPS from a week earlier to 0.40 percent as of Wednesday, Bankrate.com reported.
In the most-recent Mortgage Market Index report, ARMs accounted for 9.1 percent of all inquiries. ARM share widened from 8.9 percent the previous week.
Freddie projected that ARM share will be 10 percent in the first-half 2015 and 11 percent in the second half.
