Mortgage rates rise slightly even as spreads to Treasurys narrow

Mortgage rates remained relatively flat, rising 2 basis points on a week-over-week basis, as yields for the benchmark 10-year Treasury spiked at the start of the period before dropping 12 bps, according to Freddie Mac.

Even though mortgage rates have been at near-record lows for the last month, "there are some interesting compositional shifts as the 10-year Treasury rate has increased modestly over the past month while mortgage spreads have declined," Sam Khater, Freddie Mac's chief economist, said in a press release. "Spreads may decline even further but the rise in Treasury rates will make it difficult for mortgage rates to fall much more over the next few weeks."

In fact, 10-year yields have been on a roller coaster ride in the past month, bottoming out at 0.504% on Aug. 4, rising to 0.755% last Thursday before dropping to 0.647% on Wednesday and to 0.632% Thursday morning.

The 30-year fixed-rate mortgage averaged 2.93% for the week ending Sept. 3, up from last week when it averaged 2.91%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.49%.

The 15-year fixed-rate mortgage averaged 2.42%, down from last week when it averaged 2.46%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.93% with an average 0.2 point, up from last week when it averaged 2.91%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.3%.

The biggest mover for rates in the past week was the delay of the adverse market fee for refinancings that was being imposed by Fannie Mae and Freddie Mac, said Matthew Speakman, a Zillow economist in a commentary accompanying the release of its rate tracker on Wednesday.

"Rates continued their downward trajectory, albeit at steadier pace, and returned to levels last seen back in early August. The Federal Reserve's continuing rate of buying mortgage bond purchases have kept downward pressure on rates and ensured that markets continue to function as intended," Speakman said.

"That said, despite the return to record lows, two things are important to keep in mind regarding the path forward for mortgage rates. First, these record low rates only apply to the most creditworthy borrowers with straightforward loans — people with weaker credit or seeking less typical loan types are being quoted much higher rates. Second, the roll-out of said FHFA program was only delayed, not cancelled, meaning that mortgage rates could begin to see modest increases once lenders begin to reapply the price adjustment. For now, mortgage rates are enjoying another strong stretch back to long-term lows."