Mortgage Rates

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses mortgage rates.

  • The average rate on a 30-year fixed rate mortgage as measured by the Freddie Mac Primary Mortgage Market Survey, eased last week to 3.98% from 3.99% a week earlier.
  • The decline was precipitated by a steady decline in the 10-year Treasury over the preceding week from a peak of 2.38% on March 19th.
  • The rate on the 10-year Treasury rose towards the end of last week, likely pushing up on the average 30-year fixed, but it fell sharply Monday in response to Friday’s weaker than expected employment figures.
  • The spread between the two rates has historically hovered around 1.5%, but it increased last year as Treasury rates nose-dived in August.  Investors in MBS will demand higher rates to purchase those investments due to heightened pre-payment risk when rates fall.  As a result, mortgage rates do not follow the Treasury down in a lock-step and the spread opens up.  The spread is back below 2%, but may rise as Treasury rates move toward 2% again.
  • The average 30-year FRM is likely to remain steady or ease slightly this week; refinancing activity may grow in the near term as a result, while affordability for purchases will remain near historic highs.

Ken Fears, Director, Regional Economics and Housing Finance

Ken Fears is the Manager of Regional Economics and Housing Finance Policy. He focuses on regional and local market trends found in the Local Market Reports and the Market Watch Reports . He also writes on developments in the mortgage industry and foreclosures.

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