There was a modest up tick in fixed interest rates on residential loans, but the rise could be reversed in the next report seven days from now.
Freddie Mac reported in its Primary Mortgage Market Survey that 30-year fixed rates average 3.48 percent in the week ended July 28.
That put the 30 year 3 basis points higher than in Freddie’s prior report. Long-term rates, however, fell 50 BPS from the same week last year.
National Association of Federal Credit Unions Chief Economist Curt Long commented on the Federal Open Market Committee’s announcement of no change in interest rates.
“The tone of the statement was largely positive,” Long said. “The assessments of the economy in general and the labor market in particular were more upbeat, and the committee deemed that risks had diminished.
“Nevertheless, there was no indication that the committee anticipates that inflation will pick up in the near term, which leaves them enough slack to maintain a cautious approach to normalizing rates.”
Freddie Mac Chief Economist Sean Becketti noted in the report that rates rose even though the 10-year Treasury yield was flat.
Fixed rates could be approximately 4 BPS better in next week’s survey from Freddie based on a Mortgage Daily analysis of Treasury market activity.
That outlook is supported by prices on mortgage-backed securities, which MBSQuoteline Director Joe Far says have firmed up since Freddie surveyed lenders this week.
“MBS prices were considerably lower early this week when the Freddie Mac survey was conducted,” Farr wrote. “The improved MBS prices results in mortgage rates on Thursday being 4 or 5 BPS better than what the survey shows.”
Some possible insight into the improvement was offered by Bankrate.com Chief Financial Analyst Greg McBride.
“The Fed gave an upgraded assessment of the economy, which sends a signal that a potential rate hike later this year is on the table,” McBride said in a written statement to Mortgage Daily. “But the market isn’t buying it, and mortgage rates have been sliding ever since the Fed’s announcement.”
In the National Association of Federal Credit Union’s
NAFCU Economic & CU Monitor: Forecast July 2016, 30-year rates are forecasted to average 3.6 percent this year and 4.0 percent in 2017.
The  U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended July 22 had the spread between interest rates on jumbo mortgages and conforming loans at 18 basis points, wider than from 14 BPS in the prior report.
Freddie’s report had 15-year fixed rates averaging 2.78 percent, 3 BPS higher than in the week ended July 21. The spread between 15- and 30-year rates was unchanged at 70 BPS.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.78 percent in Freddie’s survey, the same as in the last report.
One-year ARM rates were 2.67 percent as of Thursday,
HSH.com reported, climbing from 2.60 percent seven days earlier. A previous report from Freddie had one-year ARMs averaging 2.52 percent in the week ended July 30, 2015.
Treasury Department data indicate that the yield on the one-year Treasury note, which is used to determine rate changes on many ARMs, closed at 0.53 percent today, a basis point less than last Thursday.
Meanwhile, the London Interbank Offered Rate was 1.07 percent as of Wednesday, Bankrate.com reported. LIBOR leapt 10 BPS from seven days earlier.
ARM share in the latest Mortgage Market Index report was 6.0 percent, thinning from the previous week’s 6.5 percent.
