The average primary market rate for a 30-year fixed-rate mortgage during the week ending May 10 set a new record low a basis point lower than the previous week’s at 3.83% in Freddie Mac’s survey, reflecting a drop in secondary market bond yields due to renewed uncertainty in Europe.
Other sources of rate information also noted a decline during the week toward record lows due to European concerns.
In terms of longer-term bond yields during the week, “certainly from our perspective...things were dropping pretty quick,” Rick Allen, chief operating officer of online mortgage shopping website Mortgage Marvel, told this publication in an interview Thursday morning. But typical of longer-term mortgage rates in such market conditions they declined to a lesser amount, he noted.
Lenders appear to be reacting as expected, some raising their prices to slow down volume to manage capacity while others remain aggressive, Allen said.
He said the spread of the 10-year Treasury yield to a 30-year, conforming no-point primary mortgage market rate as tracked by his company has widened over the past month. Last month’s 4% 30-year rate was 1.95% above a 10-year at 2.05%. Earlier this week, the 3.92% 30-year rate was 2.04% above a 10-year at 1.88%. (The 10-year was at 1.9% Thursday morning.)
Allen ultimately called the drop in rates this week “reasonably significant” but the reaction to it “very typical.”
“It almost feels like a broken record,” he said of the latest drop in the 30-year, which fits with a pattern of ups and downs in rate movements as uncertainty in Europe has ebbed and flowed.
All loans except the one-year Treasury-indexed adjustable-rate mortgage experienced declines in Freddie's survey this week.
The 15-year FRM fell two basis points to 3.05%, the five-year Treasury hybrid declined four basis points to 2.81% and the average rate for a one-year Treasury adjustable-rate mortgage rose by three basis points to 2.73%.
Points this week averaged 0.7 of a point for 30-year and 15-year loans and 0.5 for five-year hybrids and one-year Treasury ARMs.
A year ago, the 30-year averaged 4.63%, the 15-year averaged 3.82, the five-year Treasury hybrid averaged 3.41% and the one-year Treasury ARM averaged 3.11%.
