Rate Direction Appears 'Calm' Before Potential 'Storm'

Bond yields that pressured Freddie Mac's average for 30-year primary market mortgage rates slightly lower over the past week appeared to be stabilizing as of late Thursday morning ahead of an influential economic indicator due Friday. Art Frank, director and head of mortgage-backed securities research at Deutsche Bank Securities, New York, compared the secondary market for the agency mortgage-backed securities yields that influence primary market rates as slightly lower and in a calm before a potential storm Friday when some employment-related statistics are set to be released. The average rate for a 30-year fixed-rate mortgage during the week ended Sept. 3 dropped to 5.07% from 5.14% the previous week and 6.35% a year ago, according to Freddie Mac. "Bond yields pushed mortgage rates slightly lower this week," said Frank Nothaft, Freddie Mac vice president and chief economist. The benchmark 10-year Treasury bond yield had slid to 3.3% from near 3.5% since Aug. 28. At deadline, it was holding relatively steady at 3.33%. The average 15-year FRM rate during the week was 4.54%, down from 4.58% the previous week and 5.9% a year ago. The average rate for a five-year Treasury indexed hybrid adjustable-rate mortgage was 4.67%, down from 4.59% the week before and 5.97% a year ago. The average rate for a one-year Treasury ARM was 4.62%, from 4.69% last week and 5.15% a year ago. Average points were 0.7 for 30-year FRMs and 0.6 for 15-year FRMs, five-year Treasury hybrids and one-year ARMs.