Interest rates on residential loans didn’t move a whole lot during the past seven days, and further inaction is expected during the next seven days. But increases are projected further out.
Freddie Mac’s
Primary Mortgage Market Survey for the week ended June 25 had 30-year fixed rates averaging 4.02 percent.
Home loan rates were little changed from the previous report, when the average was 4.00 percent. But fixed rates have improved from 4.14 percent in the same week last year.
Joe Farr, director at MBSQuoteline, said that prices on mortgage-backed securities have modestly retreated since Freddie conducted its survey — leaving mortgage rates slightly higher than during the survey period.
For all of May, 30-year conforming fixed rates averaged
3.90 percent, down three BPS from April, according to the Federal Housing Finance Agency — which regulates Freddie and its secondary counterpart Fannie Mae.
An analysis of Treasury market activity by Mortgage Daily suggests that interest rates on residential loans are unlikely to be much different in Freddie’s next survey.
A majority of panelists surveyed by Bankrate.com for the week June 25 to July 1, however, predicted an increase of at least three BPS in mortgage rates over the next week. More than a quarter forecasted no change, and less than a fifth projected a decline.
On a longer-term basis, Freddie has
30-year fixed rates averaging 3.8 percent in the current quarter, then rising to 4.1 percent in the third quarter and 4.3 percent in the final quarter of 2015.
Fannie, on the other hand, has 30-year rates averaging 3.8 percent in the second quarter then rising 10 BPS each quarter for the rest of this year.
Over at the Mortgage Bankers Association, 30-year fixed rates are predicted to average 3.9 percent in the second quarter and 4.3 percent in the third quarter then climb 20 BPS each quarter thereafter through the end of 2016.
Jumbo interest rates were
12 BPS more than conforming rates in the U.S. Mortgage Market Index report for the week ended June 19. The jumbo-conforming spread widened from 10 BPS in the previous report.
On 15-year mortgages, Freddie reported the average at 3.21 percent, off two basis points from
from the week ended June 18. During the same period, the spread between 15- and 30-year rates widened to 81 BPS from 77 BPS seven days earlier — making 15-year mortgages a more attractive option.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.98 percent in Freddie’s most-recent survey, also two BPS better than in the last report.
Hybrid rates are expected by Freddie to go from 2.9 percent in the current quarter to 3.2 percent three months later then rise to 3.4 percent in the fourth quarter.
Fannie predicts hybrid ARMs will average 2.9 percent in the second quarter, 3.1 percent the following quarter and 3.2 percent in the final quarter of this year.
A three-basis-point decline left one-year Treasury-indexed ARMs at 2.50 percent in Freddie’s survey. One-year ARMs averaged 2.40 percent in the week ended June 26, 2014.
The forecast from Freddie is for the one year to average 2.4 percent in the second quarter then rise 10 BPS each quarter after that through the second-quarter 2016.
In Fannie’s outlook, the one-year ARM is expected to average 2.5 percent in the current quarter then rise 10 BPS each three months through the end of next year.
The index for the one-year ARM, the one-year Treasury yield, closed at 0.29 percent Thursday,
up three BPS from seven days prior, according to Treasury Department data.
Bankrate.com reported another ARM index, the six-month London Interbank Offered Rate, at 0.44 percent as of Wednesday, a basis point less than a week previous.
ARM share in the latest Mortgage Market Index report was 9.4 percent, up slightly from 9.2 percent one week earlier.
Freddie sees ARM share going from eight percent in the second quarter to nine percent in the second half.
