Fixed Mortgage Rates Rise, 10-Year Yield Jumps

Average rates for 30- and 15-year fixed rate mortgages rose a bit in Freddie Mac’s latest weekly survey, and a significant rise in a key long-term rate indicative bond yield Thursday morning suggests they could continue to increase.
 
The rate-indicative 10-year Treasury bond yield, which hit record low of 1.39% last month, has been generally trending upward. The rise accelerated this week, increasing most notably by roughly 10 basis points just between Wednesday and Thursday. As of late morning the benchmark yield was at 1.72%.
 
Freddie Mac vice president and chief economist Frank Nothaft said in his rate report that the average weekly rate for a 30-year FRM was up four basis points during the week ending Aug. 9 at 3.59%. The average 15-year rate was up just a basis point at 2.84%.
 
He said the rise in fixed mortgage rates followed “stronger than expected employment reports.”
 
The average rate for five-year Treasury-indexed hybrid mortgages also rose in Freddie’s survey, inching up two basis points to 2.77%.
 
In contrast, the average rate for a one-year Treasury adjustable-rate mortgage was down five basis points at 2.65%.
 
One-year Treasury ARMs also averaged the fewest points in the most recent week at 0.4 of a point. All other types of mortgages in Freddie’s survey averaged 0.6 of a point.
 
A year ago, average weekly survey rates were as follows: 4.32% for 30-year FRMs, 3.5% for 15-year FRMs, 3.13% for five-year Treasury hybrids and 2.89% for one-year Treasury ARMs.
 
The rate increase came on the heels of Freddie Mac’s latest monthly economic and housing outlook report, in which it slightly decreased its estimate for the 2012 refinance share of total originations to 73% from 74%, but left its origination estimate for the year unchanged at $1.65 trillion.
 
Estimates for housing starts and total home sales-which are based on seasonally adjusted, quarterly averages of monthly numbers reported on an annual basis-also increased a bit. The former increased to 750,000 from 740,000 while the latter rose to 4.94 million to from 4.92 million.