Mortgage rates remained more or less in a “holding pattern” for a third straight week this week, with the average rate for a 30-year, fixed-rate mortgage (FRM) at around 4.15%, down slightly from 4.17%, according to Freddie Mac’s Primary Mortgage Market Survey.
A year ago at this time, the 30-year FRM averaged 3.65%.
During the week ended Feb. 16, the average rate for a 15-year FRM was about 3.35%, down from 3.39%, according to the weekly report. A year ago at this time, the 15-year FRM averaged 2.95%.
The average rate for a five-year, Treasury-indexed, hybrid adjustable-rate mortgage (ARM) was around 3.18%, down from 3.21%. A year ago, the five-year ARM averaged 2.85%.
Whether meaningful or not, it is at least interesting to note that the 30-year has diverged from its normal correlation with 10-year Treasury bonds. This divergence, however, is likely to be short-lived.
“For the last 46 years, the 30-year mortgage rate has been almost perfectly correlated with the yield on the 10-year Treasury, but not this year,” says Sean Becketti, chief economist for Freddie Mac, in a statement. “From Dec. 29, 2016, through today, the 30-year mortgage rate fell 17 basis points to this week’s reading of 4.15 percent. In contrast, the 10-year Treasury yield began and ended the same period at 2.49 percent.
“While we expect mortgage rates to fall into line with Treasury yields shortly, this just may be a year full of surprises,” he adds.