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Freddie Mac’s latest weekly survey showed 30-year fixed-rate mortgages fell 4 basis points to 6.66% last week after rising 40 basis points last week. This reflects the volatility caused by continued economic uncertainty.
However, this week, as the gaps between these loans and their options widen again this week, eligible borrowers will be able to get lower rates with jumbo mortgages.
Also, the current situation is very difficult to address, as jumbo loans are primarily intended for high-income home buyers.
The Freddie Mac index collects mortgage rates reported by lenders over the past three days. It focuses on existing fully amortized home equity loans with 20% deposits and excellent credit.
At that time, a year ago, the average interest rate was 2.99%. “Interest rates are much higher than they were a year ago,” said Sam Hater, chief economist at Freddie Mac.
Over at HousingWire’s Mortgage Rate Center, Black Knight’s Optimum Blue OBMMI pricing engine measured the 30-year mortgage rate at 6.651% on Wednesday, down from 6.643% the previous week.
Meanwhile, the 30-year fixed rate (over $647,200) fell to 6.137% on Wednesday from 6.294% the previous week.
Interest rates rose 100 basis points on Wednesday to 6.95 percent for conformers and 5.95 percent for mortgages, according to Mortgage News Daily.
However, the Mortgage Bankers Association (MBA) estimated the average contract compliance rate this week at 6.75%. In the case of jumbo loans, it increased from 6.01% to 6.14% in the same period.
A South Carolina lender told HousingWire, “Jumbo rates offer a great opportunity compared to the traditional ARM, especially the jumbo.”
“Fannie Mae and Freddie Mac are not very hungry right now. “The government is trying to suppress it,” he said.
According to South Carolina LO, some homebuyers applying for jumbo loans are borrowers who previously paid cash but were hit hard by the stock market turmoil.
“Now that the stock market is down, people don’t want to cover their losses by selling their investments to buy a house with cash,” LO said.
“Although interest rates are higher than a year ago, mortgages are still an attractive option.
“Borrowers with lower income, however, would pay more for a conventional loan, which shows the current landscape is creating affordability challenges, the LO said.
All about the Difference
The increases in mortgage rates reflect the Fed’s tightening of monetary policy to curb rising inflation.
At the Federal Open Market Committee (FOMC) meeting in September, the Fed raised the federal funds rate by 75 basis points. A further 125 bps rate hike is expected in 2022, leaving the Fed rate well above 4%.
Treasury yields are higher in the short term, indicating an impending recession.
The two-year Treasury note, which is most closely tied to the Fed’s rate move, rose 8 basis points to 4.15 percent on Wednesday. During the same period, the 10-year bond rose from 3.72% to 3.76%.
“If you go back to the financial crisis when mortgages were toxic, the spread was about 250 to 300 basis points over 10-year Treasury bonds.
This is the biggest since [the financial crisis]. Matt Graham, co-founder, and CEO of MBS Live said Wednesday at HousingWire’s 2022 annual meeting in Scottsdale, Arizona.
“The market is going to take some time for mortgage rates to really recover,” he said. Regardless of whether investors feel comfortable, we can get mortgage rates and that’s what we’re doing today.
According to the MBA, pressure on interest rates has dramatically reduced demand for mortgages.
The Composite Markets Index, which measures the number of mortgage applications, fell 14.2% in the week ended September 30.
It was also affected by Hurricane Jan, which made landfall in Florida. Compared to the previous week, the refinancing index fell by 18% and the purchase index fell by 13%.
Reference Source: Housing Wire
