Home Mortgage Rates Creep Upwardby Tim Manni
According to the latest issue of HSH’s Market Trends Newsletter, “Home Mortgage Rates Creep Upward,” while there are several factors that have led to a rise in mortgage rates, the 10-year Treasury remains a factor at the forefront:
“Mortgage rates moved a little higher amid the raging “stimulus” debate. It seems to us that more than one factor is the cause behind the mild lift in rates, not the least of which are glimmers of hope amid the economic data.”
“HSH’s overall average for the week, our Fixed-Rate Mortgage Indicator — inclusive of conforming, jumbo and ‘expanded conforming’ interest rates — rose by eight basis points (.08%), finishing the week at 5.94%. The companion overall 5/1 Hybrid ARM average moved .06 upward, landing at a week-ending value of 5.67%. Conforming 30-year FRMs trudged upward by nine basis points, while Jumbo 30-year FRMs actually declined to 6.83% for the period.”
“One of the factors pressing interest rates higher is that the influential 10-year Treasury continued to move higher, and finished the week stalking the 3% mark. As we’ve noted on a number of occasions, the Treasury has still considerable but somewhat diminished influence on FRM rates in the present environment. For example, the 10-year Treasury has now risen by 75 basis points since touching a weekly low of 2.18% on December 26, but conforming mortgage rates have only lifted by 31 basis points over that time.”
“What this does mean, though, is that spreads — the differential between the 10-yr Note and the average 30-year FRM — are starting to narrow, an encouraging sign of sorts. Normally, the difference between those values runs between 150-170 basis points or so; in late December, amid still-considerable panic in the market, that gap stood at a whopping 313 basis points. Since then, that spread has narrowed to about 250 basis points again, a signal of calming in the credit markets.”
Click here to continue reading “Home Mortgage Rates Creep Upward.” HSH’s free weekly Market Trends Newsletter, an in-depth analysis of various financial markets of the week prior, is published every Monday. Email subscribers receive it in your inbox by Friday night, so sign up today! Also, be sure to check in with our Market Trends blog for all news relating to any weekly shift in mortgage rates.