Disappointing job numbers drove down interest rates on home loans. But the latest indication is that mortgage rates could be back on the rise.
A four-basis-point decline from last week left 30-year fixed rates averaging 3.66 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended April 9.
The 30 year was last this low in the week ended Feb. 5, when it averaged 3.59 percent, and has retreated 68 BPS compared to the same week last year.
“Mortgage rates fell across the board following last week’s disappointing employment report,” Freddie Mac Deputy Chief Economist Len Kiefer said in the report. “The U.S. economy added 126,000 new jobs in March, well below market expectations of 247,000 jobs.”
Joe Farr, director at MBSQuoteline, noted that prices on mortgage-backed securities have fallen since Freddie conducted its survey, and rates have increased about three BPS as of Thursday.
Fixed mortgage rates could turn higher based on Mortgage Daily’s analysis of this week’s Treasury market activity. Indications are that rates could be around 6 BPS worse in Freddie’s next survey.
No change is likely for mortgage rates over the next week, according to 70 percent of panelists surveyed by Bankrate.com for the week April 9 to April 15. A fifth predicted an increase of at least 3 BPS, and a tenth projected a decline.
In its
April 2015 Economic and Housing Market Outlook, Freddie predicts that 30-year fixed rates will average 3.8 percent in the second quarter, then rise to 4.1 percent three months later.
At 7 BPS, the jumbo-conforming spread in the U.S. Mortgage Market Index report from LoanSifter-Optimal Blue and Mortgage Daily for the week ended April 3 was wider than 5 BPS in the previous report.
Freddie’s survey had 15-year fixed rates averaging 2.93 percent, five BPS better than in the report for the week ended April 2. The spread between 15- and 30-year rates widened to
73 BPS from 72 BPS seven days prior.
At 2.83 percent, five-year, Treasury-indexed, hybrid, adjustable-rate mortgages were nine BPS less than in Freddie’s last report.
Freddie has hybrid ARMs rising to 2.9 percent this quarter and 3.2 percent in the third quarter.
One-year Treasury-indexed ARMs averaged 2.46 percent in the latest week, the same as in Freddie’s last survey. The one-year averaged 2.41 percent in the week ended April 10, 2014.
Freddie’s forecast has one-year ARMs averaging 2.4 percent in the second quarter and rising 10 BPS each of the following four quarters.
One-year ARMs adjust based on the one-year Treasury yield, which fell to 0.22 percent Thursday from 0.25 percent one week earlier, according to Treasury Department data.
Some other ARMs utilize the six-month London Interbank Offered Rate — or LIBOR — as the index. LIBOR was 0.40 percent Wednesday, the same as one week prior, according to Bankrate.com.
ARM share was 8.9 percent in the most-recent Mortgage Market Index report, off from 9.2 percent the previous week.
Freddie predicts ARM share will rise from an expected 8 percent in the current quarter to 9 percent in the second-half 2015.
