Current market rates

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The average 30-year and 15-year fixed-rate mortgage rates increased to their highest levels in over a year during the week ending June 14, 2013. Driving these rate increases, the 10-year Treasury Note climbed slightly. The difference between the 30-year mortgage rate and the 10-year Treasury Note rate increased to 1.78%. This is 0.38 percentage points above the historical spread, indicating homebuyers are still overpaying for mortgages.

Nearly all rates used to set adjustable rate mortgages (ARMs) decreased in May 2013. These include the 6-month and 3-month Treasury Bill rates, the London Inter-Bank Offered Rate (LIBOR), and the 12-Month Treasury Average.

As of May 2013, the average ARM rate has likely bottomed. This rate will increase once the Federal Reserve inevitably raises its rates. ARM use will pick up when home prices rise consistently faster than the rate of inflation and buyers seek to extend their purchasing power.

Average 30-Year Conventional Commitment Rate

30-year

Chart update 06/13/13
Current
06/13/13
3.98%
Month ago
05/16/13
3.48%
Year ago
06/14/12
3.65%
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 15-Year Conventional Commitment Rate

15-year
Chart update 06/13/13
Current
06/13/13
3.09%
Month ago
05/16/13
2.63%
Year ago
06/14/12
2.95%
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

ARM-Rate
Chart updated 05/30/13
May 2013
2.49%
Apr 2013
2.52%
May 2012
2.83%
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

10-year
Chart update 06/13/13
Current
06/11/13
2.20%
Month ago
05/13/13
1.92%
Year ago
06/12/12
1.67%
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

15-30-10-YearCombo

Chart update 06/10/13
Average 15-Year
May 2013
2.68%
Average 30-Year
May 2013
3.51%
10-Year Treasury Note Average
May 2013
1.93%
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

91-day

Chart update 06/13/2013
Current
06/13/13
0.045%
Month Ago
05/16/13
0.045%
Year Ago
06/14/12
0.085%
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. [For more on the use of §1031 monies, see the August 2008 article, Interest imputed on §1031 monies delivered to facilitators.]

3-Month Treasury Bill

3-month

Chart update 06/13/13
May 2013
0.04%
Apr 2013
0.06%
May 2012
0.09%
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

6-month

Chart update 06/13/13
May 2013
0.08%
Apr 2013
0.09%
May 2012
0.15%

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

TreasurySecuritiesAvgYield

Chart update 06/06/13
May 2013
0.12%
Apr 2013
0.12%
May 2012
0.19%
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

12-month

Chart update 06/06/13
May 2013
0.163%
Apr 2013
0.169%
May 2012
0.147%
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 (11th FHLBB District)

CostOfFunds

Chart update 05/30/13
May 2013
0.97%
Apr 2013
0.99%
May 2012
1.16%
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 Cost-of-Funds, 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 05/30/13
1 Month
0.19%
6 Month
0.42%
1 Year
0.69%
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.

Prime Rate

PrimeRate

Chart update 05/30/13
May 2013
3.25%
Apr 2013
3.25%
May 2012
3.25%
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 Prime Rate is used by banks to price short-term business loans and set ARMs tied to the Prime Rate. Historically the rate is 3% over the Federal Funds Target Rate.

Discount Rate – Federal Reserve Bank of San Francisco

DiscountRate

Chart update 05/30/13
May 2013
0.75%
Apr 2013
0.75%
May 2012
0.75%
Usury law limits the annual interest yield on nonexempt loans to 10%, or the discount rate plus 5%, whichever is greater. The discount rate is charged on loans made by the the Federal Reserve Bank to its members. More information is available on the Federal Reserve Bank of San Francisco’s Discount Rate page.

Applicable Federal Rates

ApplicableFedRates

Chart update 05/30/2013
Short (to 3 years)
June 2013
0.18%
Medium (3 to 9 years)
June 2013
0.95%
Long (9+ years)
June 2013
2.44%
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.

Consumer Price Index — Urban Consumer (CPI-U)

Last updated 05/30/13

(1967=100)

San Francisco Los Angeles
Apr 2012 734.706 Apr 2012 699.806
Apr 2013 752.199 Apr 2013 706.239
Annual Change 2.4% Annual Change 0.9%
San Diego
Second Half 2011 856.715
Second Half 2012 869.959
Annual Change 1.5%
The periodic percentage change in the consumer price index (CPI) is a measure of domestic inflation, and is used to measure price movements among goods and services associated with the consumer’s cost of living. The CPI is one of the factors used to adjust monthly rents in non-residential leases. More information about the CPI is available on the Bureau of Labor Statistics New Releases page. [For more information on the CPI, see the November 2009 first tuesday article, Calculating Owner-Occupied Housing in CPI. first tuesday students can also see Chapter 44 of the textbook Property Management, "Rent Increases and the CPI," available on the Forms-on-CD 4.2 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.)]

Rate Analysis for Private Lender Section 32 Reg-Z Loans

Last updated 05/09/13

Month* 6-Month 1-Year 2-Year 3-Year 5-Year 7-Year
April 2013 0.09% 0.12% 0.23% 0.34% 0.71% 1.15%
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, please reference the June 2008 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.)]

*Rate information gathered from:
The Federal Reserve Board
Federal Reserve Bank of San Francisco
Federal Reserve Bank of St. Louis
The Bureau of Labor Statistics
Federal Home Loan Bank of San Francisco
Federal Home Loan Mortgage Corporation (Freddie Mac)
Federal National Mortgage Association (Fannie Mae)
U.S. Department of Labor
U.S. Department of the Treasury
Internal Revenue Service

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