Some worse-than-expected U.S. employment news placed downward pressure on interest rates for home loans. Bond market activity suggests a further decline could be ahead.
Thirty-year fixed rates came in at an average of 4.34 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended April 10.
The average for 30-year mortgages declined from 4.41 percent in the previous report but stood far above 3.43 percent in the year-earlier report.
“The economy added 192,000 jobs in March, which was below the market consensus forecast but followed an upward revision of 22,000 jobs in February,” Freddie Mac Chief Economist Frank Nothaft said in the report.
Treasury market activity suggests that 30-year rates could be around 5 BPSÂ lower in Freddie’s next report. Fixed rates tend to move with the yield on the 10-year Treasury note, which averaged 2.70 percent during the period that Freddie surveyed lenders, while the 10-year yield closed at 2.65 percent Thursday, according to Treasury Department data.
Treasury yields sank Thursday as investors dumped stocks — sending the Dow Jones Industrial Average down 267 points. The sell off was led by technology stocks, with the technology-heavy Nasdaq index plunging more than 3 percent.
A equal share, 38 percent, of Bankrate.com panelists for the week April 10 to April 17 predicted mortgage rates will either decline at least 3 BPS over the next week or won’t change. Less than a quarter of the group saw an increase ahead.
In the Mortgage Bankers Association’s latest Mortgage Finance Forecast, 30-year rates are expected to climb from 4.4 percent in the first quarter to 4.6 percent in the second quarter. MBA has the 30 year continuing to rise until the third-quarter 2015, when it is expected to reach 5.3 percent.
On the jumbo front, inquiries for jumbo mortgages in the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended April 4 indicated that jumbo rates were a single basis point higher than conforming rates. The jumbo-conforming spread narrowed from 3 BPSÂ in the previous report.
Freddie said 15-year mortgages averaged 3.38 percent, 9 BPS better than in the week ended April 3. Shorter terms were more alluring this week as the spread between 15- and 30-year mortgages widened to 96 BPS from 94 BPS a week earlier.
A three-basis-point decline for five-year, Treasury-indexed, hybrid, adjustable-rate mortgages left the average at 3.09 percent in Freddie’s survey.
Freddie reported one-year Treasury-indexed ARMs at 2.41 percent, 4 BPS below last week. One-year ARMs averaged 2.62 percent in the week ended April 1, 2013.
One-year ARM borrowers were given a gift, with the underlying index — the yield on the one-year Treasury note — falling to 0.09 percent from 0.11 percent seven days sooner. The last time the one-year yield was this low was on Nov. 4, 2013, according to historical Treasury Department data.
As has been the case for months, the six-month London Interbank Offered Rate remained at 0.33 percent as of Wednesday.
The most recent Mortgage Market Index report indicated that ARMÂ share was 14.0 percent, inching up from 13.9 percent a week earlier.
