Mortgage

Freddie Mac: Borrowers opt for 30-year mortgages as short term rates increase

Spread between long and short term rates narrows

Long term mortgage interest rates increased this week, however despite the increase, the gap between long and short term interest rates continues to narrow, according to Freddie Mac’s weekly Primary Mortgage Market Survey.

“This week’s survey reflects last week’s uptick in long-term interest rates, with the 30-year fixed mortgage rate up four basis points to 3.94%,” said Len Kiefer, Freddie Mac deputy chief economist. “The 30-year mortgage rate has been bouncing around in a 10 basis point range since September.”

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12-7-17

(Source: Freddie Mac)

The 30-year fixed-rate mortgage increased slightly to 3.94% for the week ending December 7, 2017. This is up from last week when it averaged 3.9%, but down from 4.13% last year.

The 15-year FRM also increased from last week’s 3.3%, hitting 3.36% this week. This is the same as last year at this time.

The five-year Treasury-indexed hybrid adjustable-rate mortgage increased to 3.35%, up from 3.32% las week and 3.17% last year.

“While long-term rates have been relatively steady week-to- week, shorter term interest rates have been on the rise,” Kiefer said. “The spread between the 30-year fixed mortgage and the 5/1 Hybrid ARM rate was 59 basis points this week, down 43 basis points from earlier this year.”

“With a narrower spread between fixed and adjustable mortgage rates, more borrowers are opting for a fixed product,” he said. “The MBA reported earlier this week that the ARM share of conventional mortgage applications was 16.7%, down from over 20% in the spring.”

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