Current market rates

The average 30-year fixed rate mortgage (FRM) and 15-year FRM rates decreased during the week ending July 24, 2015. The 30-year FRM rate averaged 3.97% and the 15-year FRM rate averaged 3.15%. Mortgage rates still remain relatively low due primarily to near-zero short-term borrowing rates set by the Federal Reserve, as well as the present lack of investment opportunities for the excess sums in bonds and on deposit with the Fed. This allows homebuyers to borrow more mortgage funds with relatively unchanged incomes. However, mortgage rates will begin to increase steadily in late 2015 as the bond market anticipates the Fed’s inevitable short-term rate hike.

The 10-year Treasury Note rate dropped to 2.27% on July 23, 2015. Lenders use the 10-year T-Note to determine a homebuyer’s mortgage rate. The difference between the note rate and the 10-year T-Note rate represents the lender’s risk premium, which covers potential losses due to mortgage default. Today’s spread between the 10-year T-Note and 30-year FRM rate is at 1.7%, above the historical difference of 1.4%. Thus, though mortgage rates have fallen, the elevated spread indicates homebuyers are still overpaying for mortgages while lenders rake in the profits from increased risk premiums.

The monthly rates used to set adjustable rate mortgages (ARMs) mainly increased in June 2015. The applicable federal rates, the 12-month Treasury average, the London inter-bank offered rate (LIBOR) and the 6-month Treasury bill increased, while the 3-month Treasury bill remained the same.

Click the link to go directly to a chart, or browse the charts by scrolling below.

1. 30-year fixed rate mortgage (FRM) rate, weekly — Chart update 07/23/15
2. 30-year FRM rate, monthly — Chart update 06/25/15
3. 15-year FRM rate — Chart update 07/23/15
4. 5/1 adjustable rate mortgage (ARM) rate — Chart update 06/25/15
5. 10-year Treasury note rate — Chart update 07/23/15
6. Combined FRM and 10-year Treasury note rates — Chart update 07/16/15
7. 91-day Treasury bill rate — Chart update 07/23/15
8. 3-month Treasury bill — Chart update 07/16/15
9. 6-month Treasury bill — Chart update 07/16/15
10. Treasury Securities average yield — Chart update 07/02/15
11. 12-month Treasury average — Chart update 07/16/15
12. Cost of Funds Index — Chart update 06/25/15
13. London Inter-Bank Offered rate (LIBOR) — Chart update 06/25/15
16. Applicable federal rates — Chart update 07/02/15
17. Private lender section 32 Reg-Z loans — Chart update 07/09/15

Average 30-Year Conventional Commitment Rate

30yrFRMwest

Chart update 07/23/15

Current
07/16/15
3.97%

Month ago
06/25/15
3.98%
Year ago
07/24/14
4.10%
The average 30-year commitment rate is the rate at which a lender commits to lend mortgage money in the United States-West as reported by Freddie Mac. The western region includes CA, AZ, NV, OR, WA, UT, ID, MT, HI, AK, and GU. More information is available on Freddie Mac’s Primary Mortgage Market Survey report.

Average 30-Year Conventional Commitment Rate: 1991-present

30yrFRM

Chart update 06/25/15
Jun 2015
Average
3.96%
May 2015
Average
3.81%
Jun 2014
Average
4.13%

Average 15-Year Conventional Commitment Rate

15yrFRM
Chart update 07/23/15
Current
07/23/15
3.15%
Month ago
06/25/15
3.15%
Year ago
07/24/14
3.21%
The average 15-year commitment rate is the rate at which a lender commits to lend mortgage money in the United States-West as reported by Freddie Mac. More information is available on Freddie Mac’s Primary Mortgage Market Survey report.

5/1 Adjustable Rate Mortgage (ARM) Average Rate

ARMaverage
Chart update 06/25/15
Jun 2015
2.94%
May 2015
2.76%
Jun 2014
2.79%
The 5/1 average adjustable rate mortgage (ARM) rate shows the average rate for the first five years after origination, as reported by Freddie Mac. After the initial five-year period, the ARM rate is adjusted annually based on an index figure, such as a certain Treasury Bill rate (which reflects Federal Reserve rate movements) or the London Inter-Bank Offered Rate (LIBOR).

10-Year T-Notes – Average Market Yield

10YrTBill
Chart update 07/23/15
Current
07/23/15
2.27%
Month ago
06/25/15
2.41%
Year ago
07/24/14
2.51%
This rate is a leading indicator of the direction of future Freddie Mac rates. The 10-year rate historically runs closer to 4% during a stable money market. The rate is influence by worldwide demand for the dollar and anticipated future domestic inflation.

Combined Average 15-, 30-Year Conventional Rates and 10-Year Treasury Note Average

ComboRates

Chart update 07/16/15
Avg 15-Year
Jun 2015
3.16%
Avg 30-Year
Jun 2015
3.96%
Avg 10-Year T-Note
Jun 2015
2.36%
The average 15- and 30-year conventional commitment rates are the rates at which a lender commits to lend mortgage money in the United States-West for the duration of the life of each respective loan as reported by Freddie Mac. More information is available on Freddie Mac’s Primary Mortgage Market Survey report. The green line reflects the 10-Year Treasury Note Average, a leading indicator of the direction of future Freddie Mac rates. It is comprised of the level of world-wide demand for the dollar and anticipated future domestic inflation.

91-Day Treasury Bill – Average Auction Rate

91DayTBill

Chart update 07/23/15
Current
07/23/15
0.03%
Month Ago
06/25/15
0.01%
Year Ago
07/24/14
0.025%
This rate determines the minimum interest rate the seller must use in a delayed §1031 transaction and report when not receiving interest on §1031 monies held by a facilitator/accommodator. This rate also sets the amount of the ordinary income the facilitator/accommodator must report.

3-Month Treasury Bill

3MosTBill

Chart update 07/16/15
Jun 2015
0.02%
May 2015
0.02%
Jun 2014
0.03%
The 3-Month Treasury Bill is the rate managed by the Federal Reserve through the Fed Funds Rate as the base price of borrowing money in the short-term. It is used in determining the yield spread, which predicts the likelihood of a recession one year forward. The posted rate is the monthly average for the listed month. Rates are released with a 1-2 month reporting delay. [See the first tuesday article, Using the yield spread to forecast recessions.]

6-Month Treasury Bill

6MosTBill

Chart update 07/16/15
Jun 2015
0.09%
May 2015
0.08%
Jun 2014
0.06%

The six-month T-Bill rate is one of several indices used by lenders to periodically adjust the adjustable rate mortgage (ARM) rate. The adjusted rate equals the indexed rate (at the time of adjustment or an average of several prior rates) plus the lender’s profit margin. The posted rate is the monthly average for the listed month. Rates are released with a 1-2 month reporting delay.

Treasury Securities Average Yield — 1-Year Constant Maturity

TreasurySecurities

Chart update 07/02/15
Jun 2015
0.28%
May 2015
0.24%
Jun 2014
0.10%
This index is one of several indexes used by lenders as stated in their ARM note to periodically adjust the note’s interest rate.The ARM interest rate equals T-Bill yield, plus the lender’s profit margin. The index is an average of T-Bill yields with maturities adjusted to one year.

12-Month Treasury Average

12MonthTreas

Chart update 07/16/15
Jun 2015
0.183%
May 2015
0.168%
Jun 2014
0.118%
This index is one of several indexes used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. This figure is an average of the one-year T-Bill rates for the past 12 months.The ARM interest rate equals the 12-Month Treasury Average yield plus the lender’s profit margin. There is a one-two month lag in data reporting for the 12-Month Treasury Average.

Cost of Funds Index (COFI) (11th FHLBB District)

CostofFunds

Chart update 06/25/15
May 2015
0.68%
Apr 2015
0.69%
May 2014
0.70%
This index is one of several indexes used by lenders to periodically adjust the interest rate on an ARM note. The ARM interest rate equals Cost of Funds Index, plus the lender’s profit margin. Current index reflects the cost of funds two months’ prior in the United States-West. More information is available on the Federal Home Loan Bank of San Francisco Cost of Fund’s Index page.

London Inter-Bank Offered Rate

LIBOR

Chart update 06/25/15
1 Month
0.19%
6 Month
0.44%
1 Year
0.77%
This index is one of several indexes used by lenders as stated in their ARM note to periodically adjust the note’s interest rate.The ARM interest rate equals the LIBOR rate plus the lender’s profit margin. The rate is set by the banks in London, England.

Applicable Federal Rates

ApplicableFedRates

Chart update 07/02/15
Short (3 years or less)
July 2015
0.48%
Medium (3 to 9 years)
July 2015
1.65%
Long (9+ years)
July 2015
2.70%
These rates determine minimum interest yield reportable on carryback financing. The AFR category is determined by the carryback due date. *Rates are for monthly payments. More information on AFRs on other payment periods can be found on the Internal Revenue Service Applicable Federal Rates page.

Rate Analysis for Private Lender Section 32 Reg-Z Loans

Data courtesy Federal Reserve

Chart update 07/09/15

Month* 6-Month 1-Year 2-Year 3-Year 5-Year 7-Year
June 2015 0.09% 0.28% 0.69% 1.07% 1.68% 2.10%
On junior trust deed loans, a margin of 5 – 8% points is added to the Index Figure (Cost-of-Funds Rate) for the maturity date of a Treasury bill equal in length to the payoff date of the loan to set the Section 32 threshold for term limitations. With this in mind, if the percentage of the total loan amount represented by points and fees is greater than the applicable Federal Securities Rate plus ten percentage points, additional disclosures, limitations and prohibitions are triggered by Regulation Z (Reg-Z) Section 32. [For more information, see the first tuesday articles, Regulation Z Controlled Lending and Brokering Cal-32 High-Cost Loans. first tuesday students can also access first tuesday Form 223-1, Points and Fees Test, and first tuesday Form 223-1, Supplemental Truth-in-Lending Section 32 Disclosure, available on the Forms-on-CD 4.3 and Online Library. (Not a first tuesday student? Click here and enroll in any course for one-year’s access to all books and materials published by first tuesday.)]

14 Comments

  1. Donald Rubin said:

    Very useful and concise information. It really tells the story very well.

  2. Nick Burkey said:

    I’ll have to admit the information overload is a factor in understanding, however it is good to know that First Tuesday continues to track these indices. Each chart references a brief explanation of its meaning. With continued support like this, outside of the Lending Industry interpretations, I’m starting to catch-on. First Tuesday,
    you rock!

  3. BigIrr said:

    Excellent Set of GRAPHS 4 THE PUBLIC! 2 BAD THEY CAN’T UNDERSTAND IT UNLESS THEY HAVE A BUSINESS DEGREE LIKE ME!

  4. Carole Swanston said:

    Invest in property …while the rates are extremly low and our market prices in Ca.are half of the price as a home or piece of land 8-9 years ago. It may be years before we have a total recovery and the home price may not go up to where it was, butit is the best way to invest and cheaper to buy then to rent.

  5. ATHENA TUTORIAL ACADEMY said:

    How low can it go? The U.S. government–up to its ears in debt–is still able to borrow at unbelievably low rates (well under 2%) from foreign investors. That ability is currently based solely on the belief that American will always pay its debts and is a good investment risk.

    How about a little glimpse of macro-economics?

    Now could that perception ever change? If ever the foreign investors come to decide that America might not pay its debts, then we would see a sudden rise in interest rates that would boggle the mind, kicking off a massive inflation in consumer goods or plunging us into a deeper depression with deflation—take your pick.

    The U.S. government runs on borrowed money—borrowed from foreign investors.

    FACT: The massive U.S. debt as it currently stands, could NEVER be paid off. But if the dollar were devalued (as Roosevelt did in 1934) the debt might be paid off in cheaper dollars. This would be concomitant with a rise in the Chinese yuan.

    Here’s the catch: This would be done on the backs of the American people, as it would likely spur massive inflation and cause a spike in interest rates.

  6. ATHENA TUTORIAL ACADEMY said:

    With rates so low, and other investment vehicles so turbulent, it would make perfect sense to invest in housing for rental income at this time.

  7. gary broker said:

    You guys are great and I look to you for unadulterated truth.
    No fear of me straying with great articles like this.
    Next time I renew u can bet its with your program.

  8. Howard said:

    Really appreciate your continued current info on all types of market rates, sales, home prices, etc. Very useful for those of us working this business every single day.

  9. Jim said:

    Hi ,

    This is a very helpful analysis. Keep it up monthly for those that are serious about following ARMs.

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