There was a modest drop in mortgage rates this past week, and a similar decline is likely in the next report. Longer-term predictions are for a slight increase.
On mortgages that were closed during the month of July,
thirty-year fixed rates averaged 3.87 percent, moving down 17 basis points from the prior month.
The
improvement was even more significant compared to the same month during last year, when interest rates on residential loans averaged 4.29 percent.
Those details were among a plethora of statistics provided in the July 2016 Origination Insight Report from Ellie Mae Inc.
Interest rates averaged 3.93 percent on conventional mortgages, 3.84 percent on loans insured by the Federal Housing Administration and 3.66 percent on mortgages guaranteed by the Department of Veterans Affairs.
Freddie Mac reported in its Primary Mortgage Market Survey for the week ended Aug. 18 that 30-year fixed rates averaged 3.43 percent.
Thirty-year rates were 2 BPS lower than in the prior week and 50 BPS better than a year prior.
“Inflation is not adding any upward pressure on interest rates as the Bureau of Labor Statistics reported that the Consumer Price Index was unchanged in July,” Freddie Mac Chief Economist Sean Becketti explained of the week-over-week movement.
Fixed mortgage rates could be around 3 BPS lower in Freddie’s next survey based on a Mortgage Daily analysis of Treasury market activity.
But three-quarters of the panelists surveyed by Bankrate.com for the week Aug. 17 to Aug. 23 saw no change ahead for mortgage rates. Another quarter expected an increase of at least 3 BPS, and none predicted a decline.
“The Fed has started to chatter about a rate hike again and markets have bumped up odds of a rate hike by year-end,” Bankrate.com Chief Financial Analyst Greg McBride explained in a written statement to Mortgage Daily. “The effect on mortgage rates at this point will be very subdued.”
In Freddie’s August 2016 Economic & Housing Market Forecast, 30-year rates are projected to average 3.5 percent in the third quarter and 3.6 percent during the next-two quarters.
Fannie Mae predicted in its Housing Forecast: August 2016 that 30-year fixed mortgage rates will average 3.4 percent in the third and fourth quarters of this year then rise to 3.5 percent in the first-three months of 2017.
Interest rates on jumbo mortgages were 10 BPS more than conforming rates in U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Aug. 12. The jumbo-conforming spread thinned from 11 BPS in the report from the previous week.
Fifteen-year rates averaged 2.74 percent in Freddie’s latest survey, 2 BPS less than in the week ended Aug. 11. Rates on 15-year mortgages were 69 BPS lower than 30-year rates, the same spread as in the prior report.
At 2.76 percent, rates on five-year, Treasury-indexed, hybrid, adjustable-rate mortgages were 2 BPS more than in the prior week, according to Freddie.
Hybrid ARMs are expected to average 2.9 percent in the third quarter then climb to 3.2 percent the following two quarters, Freddie predicted.
Fannie’s forecast has hybrid ARMs at 2.8 percent in the current and final quarter of this year and 2.9 percent in the first-quarter 2017.
A
35-basis-point plunge from seven days earlier left the one-year Treasury-indexed ARM at just 2.29 percent as of Thursday, HSH.com reported. In the week ended Aug. 20, 2015, Freddie reported that one-year ARMs averaged 2.62 percent.
The yield on the one-year Treasury note, which determines rate adjustments on the one-year ARM, was 0.58 percent as of Thursday, according to Treasury Department data. The one-year yield was up from 0.55 percent seven days prior.
The six-month London Interbank Offered Rate, which is used as an index on a small share of ARMs, was 1.19 percent as of Wednesday, Bankrate.com reported. LIBOR was off from 1.20 percent one week earlier.
Ellie’s report indicated that ARM share was 4.5 percent in July 2016, thinning from 4.8 percent a month earlier and 5.5 percent a year earlier.
More recently, ARM share was
6.7 percent in the latest Mortgage Market Index report, widening from 5.5 percent one week previous.
