Interest rates on residential loans rose this past week, and indications are that they won’t be retreating in the next report.
A 12-basis-point ascension from a week earlier left 30-year fixed rates averaging 3.80 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended May 7.
“Mortgage rates rose this week to the highest level since the week of March 12 as a selloff in German bunds helped drive U.S. Treasury yields above 2.2 percent,” Freddie Mac Deputy Chief Economist Len Kiefer said in the report. “The U.S. trade deficit reached $51.4 billion in March to the highest level since 2008. Also, the Institute for Supply Management’s manufacturing index was unchanged in April, but manufacturing employment contracted as the index fell below 50 for the first time since May 2013.”
But fixed rates remain well below the year-ago level, with the 30 year averaging 4.21 percent in the same week during 2014.
MBSQuoteline Director Joe Farr said that the latest week’s movement was two weeks in the making.
“With mortgage-backed security prices dropping seven out of the last ten trading days and due to the timing of the surveys taken, the average rate reported by Freddie Mac in the prior two surveys has not reflected as large an increase in mortgage rates as was actually realized,” Farr said in a written statement. “Much of the catch up occurred this week, however, with the 12-basis-point increase.”
Thirty-year fixed rates on closed loans averaged 4.041 percent in March, according to Ellie Mae Inc.’s Origination Insight report. The average increased from 4.008 in February.
On conventional loans, March’s average was 4.112 percent, while the rate was 3.986 percent on loans insured by the Federal Housing Administration and 3.819 percent on loans guaranteed by the Department of Veterans Affairs.
Fixed rates are unlikely to be much different in Freddie’s next survey based on Mortgage Daily’s analysis of weekly Treasury market activity.
Half of the panelists surveyed by Bankrate.com for the week May 7 to May 13 predicted mortgage rates will increase at least three BPS. Another 40 percent forecasted a decline, and 10 percent expected no change.
Interest rates on jumbo mortgages were 18 BPS more than on conforming loans, according to the U.S. Mortgage Market Index report from LoanSifter/Optimal Blue and Mortgage Daily for the week ended May 1.
Freddie reported 15-year fixed rates averaged 3.02 percent, climbing eight BPS from the last report. The spread between 15- and 30-year rates
was 78 BPS, widening from 74 BPS seven days earlier.
Ellie reported 15-year share at 11.1 percent in March, the same as a month earlier.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.90 percent in Freddie’s latest survey, rising five BPS from the week ended April 30.
One-year Treasury-indexed ARMs averaged 2.46 percent, Freddie said, three BPS less than the previous week. Still, the one year was up three BPS from the week ended May 8, 2015.
At 0.24 percent as of Thursday, the yield on the one-year Treasury note was the same as one week prior, according to Treasury Department data.
No change from a week earlier left the six-month London Interbank Offered Rate at 0.41 percent as of Wednesday, according to Bankrate.com.
Ellie reported ARM share at 4.2 percent in March, widening from 4.0 percent the previous month.
ARM share was 8.7 percent in the latest Mortgage Market Index report, thinning from 9.7 percent in the previous report.
