A slight decline in long-term fixed rates on residential loans this past week could be followed up by a similar move lower over the next seven days.
The Primary Mortgage Market Survey from Freddie Mac had fixed rates on 30-year loans averaging
3.95 percent in the week ended Nov. 25.
Thirty-year rates dipped two basis points from the prior survey. Compared to the same week last year, 30-year rates were also down two BPS.
“In a quiet week leading up to the Thanksgiving holiday, the 30-year mortgage rate dipped 2 basis points to 3.95 percent,” Freddie Mac Chief Economist Sean Becketti stated in the report. “Economic releases over the last week contained no major surprises, and none are expected in the next few days.”
Freddie’s regulator and conservator, the Federal Housing Finance Agency, reported that
conforming 30-year fixed rates averaged 4.12 percent during October, five BPS less than a month earlier.
Fixed mortgage rates aren’t likely to change much in Freddie’s next survey, possibly as much as three BPS lower, Mortgage Daily’s analysis of Treasury market activity indicates.
Two-thirds of panelists surveyed by Bankrate.com for the week Nov. 25 to Dec. 2 predicted mortgage rates won’t move more than two BPS next week. Another 22 percent expected a decline, while just 11 percent projected rates will rise.
For the entire fourth-quarter 2015 and first quarter of next year, Freddie predicted in its November 2015 Economic and Housing Market Outlook that 30-year rates will average 4.0 percent then climb 20 BPS each of the remaining quarters of 2016.
The Mortgage Bankers Association predicted in its MBA Mortgage Finance Forecast that 30-year rates will average 4.0 percent in the last three months of this year then rise 20 BPS each quarter of next year.
Rates on jumbo loans were 19 BPS lower than on conforming loans in the U.S. Mortgage Market Index report for the week ended Nov. 20 from Mortgage Daily and OpenClose. The jumbo-conforming spread widened from a negative 11 BPS in the previous report.
Fifteen-year fixed rates averaged 3.18 percent in Freddie’s survey, the same as in the week ended Nov. 19. The spread between 15- and 30-year rates thinned to
77 BPS from 79 BPS.
At 3.01 percent, Freddie’s survey indicated that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages were three BPS higher than seven days earlier.
Freddie expects hybrid ARMs to average 2.9 percent this quarter and in the first three months of next year then rise to 3.4 percent in the second-quarter 2016.
Freddie reported in its survey that one-year Treasury-indexed ARMs averaged 2.59 percent, five BPS less than in the previous report. One-year ARMs averaged 2.44 percent in the week ended Nov. 27, 2014.
The one-year Treasury yield, which is used to determine changes to one-year ARMs, was 0.50 percent as of Friday, slightly more than 0.49 percent last Thursday, according to Treasury Department data.
A less popular ARM index, the six-month London Interbank Offered Rate, was
0.63 percent as of Wednesday, Bankrate.com reported. LIBOR was up from 0.60 percent seven days earlier.
ARMs accounted for 12.3 percent of all rate locks in the most-recent Mortgage Market Index report, thinning from 16.4 percent the prior week.
