After nearly two months without an increase, mortgage rates moved higher this past week. Rates on home loans for veterans remain the lowest.
On single-family mortgages that were closed during the month of August, thirty-year note rates averaged 4.27 percent.
The average rose 2 basis points from the preceding month. Compared to the same month a year ago, the average has ascended 50 BPS.
Ellie Mae Inc. reported the rates in its Origination Insight Report September 2016.
Last month’s conventional rates were 4.32 percent, according to Ellie. On mortgages insured by the Federal Housing Administration, the average was 4.27 percent. Loans guaranteed by the Department of Veterans Affairs had the lowest average note rate: 4.03 percent.
During just the seven days ended Sept. 21, thirty-year fixed rates averaged 3.83 percent, according to Freddie Mac’s Primary Mortgage Market Survey. Long-term mortgage rates jumped from 3.78 percent the prior week. It was the first increase in seven weeks. A year prior, the 30 year averaged 3.48 percent.
The deterioration in mortgages rates came as the Federal Reserve’s Open Market Committee announced it would begin winding down its quantitative easing bond investments.
National Association of Federally Insured Credit Unions Chief Economist Curt Long commented on the FOMC’s statement.
“With the commencement of the balance sheet wind-down, the Fed shifts its focus to the next rate hike,” Long said in a written statement. “On that front, the committee offered conflicting data. In its projections committee members downgraded their outlook on inflation, which would naturally argue for a delay in rate increases. However, the interest rate projections indicate that the committee still expects a quarter-point hike in December.”
Joe Farr, director of sales and marketing at MBSQuoteline, said in a written statement that prices for mortgage-backed securities have worsened since Freddie conducted the survey — an indication that mortgage rates have also risen.
Mortgage Daily’s analysis of Treasury market activity indicates that fixed mortgage rates aren’t likely to be much different in Freddie’s next survey, possibly a couple BPS higher.
A plurality of panelists surveyed by Bankrate.com for the week Sept. 20 to Sept. 27 agreed with Mortgage Daily’s outlook and predicted that mortgage rates won’t move more than 2 BPS over the next week. An increase was expected by 31 percent, and 23 percent projected a decline.
In its
September 2017 Economic & Housing Market Forecast, Freddie projected that 30-year fixed rates will average 3.9 percent in the third and fourth quarters.
Fannie Mae predicted in its Housing Forecast: September 2017 that 30-year fixed rates will average 3.9 percent from this quarter through the second-quarter 2018.
Interest rates on jumbo mortgages were
10 BPS higher than conforming rates in the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Sept. 15. The jumbo-conforming spread widened from just 3 BPS the previous week.
Freddie reported average 15-year fixed rates at 3.13 percent, climbing 5 BPS from the week ended Sept. 14. The survey had 15-year rates 70 BPS lower than 30-year rates, the same spread as in the previous report.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.17 percent, 4 BPS more than in last week’s report from Freddie.
Freddie expects hybrid ARMs will average 3.1 percent in the current and final quarter of this year.
Fannie has hybrid ARMs averaging 3.2 percent in the second-half 2017 and 3.3 percent in the first-half 2018.
Hybrid ARM rates are determined based on the one-year Treasury note yield, which the Department of the Treasury reported closed at 1.31 percent Thursday, 3 BPS higher then last Thursday.
Also serving as an index for some ARMs is the six-month London Interbank Offered Rate, which was 1.48 percent as of Wednesday, Bankrate.com reported. LIBOR was 1.45 percent seven days earlier.
Ellie’s report had ARM share at 5.7 percent in August 2017, the same as a month earlier but wider than 4.1 percent a year earlier. Last month’s ARM share was 6.5 percent on conventional loans, 0.6 percent on FHA mortgages and 0.2 percent on VA loans.
ARM share in the latest Mortgage Market Index report was 14.6 percent, wider than 10.2 percent the prior week.
