It has so far been a great month for home buyers looking to purchase or refinance their mortgages. After rates fell post elections and the FHA MIP cut announcement in the previous weeks, rates started dropping again. In a report released by Freddie Mac’s Primary Mortgage Market Survey, 10-year Treasury yield fell by 8 basis points while 30-year fixed-rate mortgage dropped to 4.12 percent in week ending January 12.
The Report
- 30-year fixed-rate mortgage concluded with an average of 4.12 percent which decreased from the previous week’s4.20 percent. It is still higher, however, compared to last year’s average of 3.92 percent.
- 15-year fixed-rate mortgage fell into a 3.37 average from last week’s 3.44 percent. A year ago, it was 3.19 percent.
- 5-year Treasury-indexed hybrid adjustable rate mortgage also decreased into a new 3.23 percent average from 3.33 percent the week prior. During the same time last year, the average was 3.01 percent.
THE SURVEY
The Primary Mortgage Market Survey®was established in April 1971 as the foremost source of mortgage trends in the regional and national level. Its data is utilized by both the public and the mortgage industry at large to gauge market conditions and evaluate mortgage loan options.
SURVEY PARAMETERS
The survey results are gathered based on lenders’ most popular mortgage products – inclusive of 30 and 15-year FRMs as well as adjustable-rate mortgages. The first-lien prime conventional conforming home purchase mortgages (with an LTV of 80 percent) are considered primary basis for the survey. Meanwhile, the U.S. Treasury yields are used to index ARMs. Lenders are asked to provide the a) initial coupon rate and points, as well as b) ARM margins for this purpose.
The new rate was largely influenced by the December jobs data which recorded a total of 156,000 new jobs. This barely reached the minimum expected by experts. However, wage growth made up for that. If this growth continues, chances are rates will spike back up while pushing inflation rates along.
