Mortgage rates increased on a weekly and monthly basis to the highest level since 2014, and more ascension is expected. Rising rates are driving more borrowers into adjustable-rate mortgages.
Average 30-year note rates on single-family loans that were closed during January 2018 were 4.33 percent, according to Ellie Mae Inc.’s January 2018 Origination Insight Report.
Rates have risen for three consecutive months and stand at their highest level since May 2017. Thirty-year note rates were 4.28 percent the prior month and 4.31 percent a year prior.
Ellie reported that last month’s average note rate was 4.37 percent on conventional loans, 4.36 percent on mortgages insured by the Federal Housing Administration and 4.10 percent on loans guaranteed by the Department of Veterans Affairs.
Freddie Mac’s Primary Mortgage Market Survey for the week ended Feb. 22 had 30-year fixed rates averaging 4.40 percent — the highest they’ve been since they were 4.41 percent in the week ended April 3, 2014. This week’s average was up 2 basis points from a week earlier and 24 BPS worse than a year earlier.
“Mortgage rates have followed U.S. Treasurys higher in anticipation of higher rates of inflation and further monetary tightening by the Federal Reserve,” Freddie Mac Deputy Chief Economist Len Kiefer said in the report. “Following the close of our survey, the release of the FOMC minutes for Feb. 21, 2018, sent the 10-year Treasury above 2.9 percent. If those increases stick, we will likely see mortgage rates continue to trend higher.”
Mortgage rates are expected by a majority of panelists surveyed by Bankrate.com for the week Feb. 21 to Feb. 27 to increase at least 3 BPS over the next week. No change was predicted by 31 percent of the panelists, while just 13 percent projected a decline.
Fannie Mae predicted in its Housing Forecast: January 2018 that 30-year rates will average 4.0 percent this quarter and the second quarter then rise to 4.1 percent in the final-two quarters of this year.
In the
U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Feb. 16, interest rates on jumbo loans were 21 BPS higher than conforming rates reported last week by Freddie, no different than one week earlier.
Freddie reported that 15-year fixed rates averaged 3.85 percent, inching up from 3.84 percent in the week ended Feb. 15. The spread between 15- and 30-year rates widened to 55 BPS from 54 BPS in last week’s report.
Five-year, Treasury-indexed, hybrid ARMs averaged 3.65 percent in Freddie’s survey, 2 BPS higher than last week.
Fannie has hybrid ARMs averaging 3.5 percent in the first and second quarters of this year then climbing to 3.6 percent in the third quarter.
The yield on the one-year Treasury note, which is used to determine rate changes for hybrid ARMs, closed Thursday at 2.02 percent, climbing from 1.99 percent seven days previous, according to Treasury Department data.
At 2.13 percent, the six-month London Interbank Offered Rate — which is utilized as an index for some legacy ARMs — has ascended 7 BPS from the preceding Wednesday, according to Bankrate.com.
ARM share in the latest Mortgage Market Index report was 17.4 percent, widening from 15.7 percent the previous week.
In Ellie’s report, ARM share was reported at 5.5 percent last month, thinner than 5.6 percent in December but wider than 5.4 percent in January 2017. ARM share was 5.9 percent on conventional mortgages, 0.5 percent on FHA loans and 0.3 percent on VA transactions.
