Long-term fixed mortgage rates dipped slightly, while shorter-term fixed rates didn’t move. But a jump in fixed rates is likely in the next report.
Freddie Mac reported in its Primary Mortgage Market Survey for the week ended Oct. 29 that 30-year fixed rates averaged 3.76 percent.
Thirty-year rates slipped from seven days earlier, when the average was 3.79 percent. They were also down from 3.98 percent 12 months earlier.
“Treasury yields oscillated without a clear direction heading into the October FOMC meeting, as investors were confident there would be no rate increase … While the FOMC left rates unchanged at this meeting, they kept a December rate hike as an option causing Treasuries to sell off in the latter part of the day, after our survey closed,” Freddie Mac Chief Economist Sean Becketti said in the report.
MBSQuoteline Director Joe Farr noted in a written statement, that rates are now higher than what Freddie reported.
Mortgage Daily’s analysis of Treasury market activity suggests that fixed rates could be around 12 basis points worse in Freddie’s next survey.
Half of the panelists surveyed by Bankrate.com for the week Oct. 29 to Nov. 4 agreed with Mortgage Daily’s forecast and predicted rates will increase at least three BPS over the next week. No change was projected by 42 percent, and just eight percent expected a decline.
Freddie’s October 2015 Economic and Housing Market Outlook has 30-year fixed rates averaging 4.0 percent during this quarter and the first-quarter 2016 then rising 20 BPS each of the following three quarters.
The Mortgage Bankers Association predicted in its
MBA Mortgage Finance Forecast that 30-year rates will average 4.0 percent in the final quarter of this year then rise 20 BPS each quarter next year.
Freddie’s regulator and conservator, the Federal Housing Finance Agency, reported that conforming 30-year fixed rates averaged 4.17 percent last month, three BPS less than in August.
In the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Oct. 23, rates on jumbo mortgages were 15 BPS better than on conforming loans. The jumbo-conforming spread was virtually unchanged from the previous week.
Fifteen-year fixed rates averaged 2.98 percent in Freddie’s survey, the same as in the week ended Oct. 22. The spread between 15- and 30-year rates narrowed to 78 BPS from 81 BPS in the last survey.
Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.89 percent in its most-recent survey,
no different than in the previous survey.
Freddie predicts that hybrid ARMs will average 2.9 percent during the fourth-quarter 2015 and the following quarter then jump to 3.4 percent in the second-quarter 2016.
Rates on one-year Treasury-indexed ARMs
tumbled to 2.54 percent from 2.62 percent but were higher than 2.43 percent in the week ended Oct. 30, 2014, Freddie reported.
In Freddie’s outlook, one-year ARMs are expected to average 2.6 percent from the fourth-quarter 2015 through the second quarter of next year.
The one-year Treasury note yield, which determines rate changes on one-year ARMs, closed Thursday at 0.33 percent — leaping 10 BPS from seven days prior — according to Treasury Department data.
The six-month London Interbank Offered Rate, which is used as an index on a small share of ARMs, was 0.53 percent as of Wednesday, up from 0.52 percent a week earlier, Bankrate.com reported.
ARMs accounted for 12.6 percent of all rate locks in the latest Mortgage Market Index report. ARM share widened from 11.2 percent the previous week.
ARM share is expected by Freddie to go from nine percent in the fourth-quarter 2015 to 13 percent in the first quarter of 2016 then widen by a percentage point each of the remaining quarters of next year.
