Who would have thought that home mortgage rates would continue to break record with declining rates across the board? Of course this is great news for homeowners and perspective home buyers looking to leverage the lowest mortgage rates of the century.
Fannie Mae’s current-coupon thirty-year fixed-rate home loans narrowed 0.03 percentage point to about 0.65 percentage point more than 10-year Treasuries as of 9:33 a.m. in New York, according to data compiled by Bloomberg. The gap, which has fallen from 0.82 percentage point on June 30th, touched a low of 0.59 percentage point on March 29th, two days before the Federal Reserve ended its buying of $1.25 trillion of home-loan debt.
Home loan rates may be rising off record lows and bond prepayments reports released July 7th show limited mortgage refinancing, suggesting there will be less supply to meet demand as borrowers move from loans in bonds on the Fed’s balance sheet. JPMorgan Chase & Co. analyst, Matthew Jozoff wrote in a July 9th report “refinance-driven supply is the fly in the ointment.”
Yields on the Fannie Mae bonds have advanced to 3.73% from a record low of 3.63% reached July 6th, down from 4.67% on April 5th, Bloomberg data show. The gain has been slower than benchmark Treasuries, whose yields have begun rising as stocks rally, damping demand for the safest assets.
Freddie Mac reported that the average interest rate on a conforming thirty-year fixed-rate home loan fell to a record low 4.57% in the week ended July 8th. That was a decline from this year’s high of 5.21% in April.
