Friday, July 15, 2011

MORTGAGE & FINANCE: Mortgage Rates Remain Steady as Home Prices Improve

Over the past week, sparks of good news indicating a step in the right direction for the economic recovery kept mortgage rates steady and still at their lowest for 2011. For the first time in eight months, U.S. home prices showed a slight increase as reported by Case Shiller Home Price Indices.'s daily survey of wholesale and direct lenders show that there was little to no impact on mortgage rates this past week which are still at favorable levels. Current 30 year fixed mortgage rates are at 4.250%, 15 year fixed mortgage rates are at 3.500% and 5/1 adjustable mortgage rates are at 2.750%. With good credit and documentation to receive lender approval, borrowers can still obtain these low mortgage rates with 0.7 to 1% origination fee. It is still the best time in many years for consumers to choose home ownership before home prices begin to increase at a steady pace.

Following the trend, current FHA 30 year fixed mortgage rates are at 4.250%, FHA 15 year fixed mortgage rates are at 3.750% and FHA 5/1 adjustable mortgage rates are at 3.000%.

Down payment requirements for FHA mortgage loans are as low as 3.5% which is a bonus considering that FHA allows gifts and housing grants to be used by borrowers. FHA closing costs (APR) do tend to be higher because of the upfront mortgage insurance premium and other FHA fees. Considering all facts, FHA mortgages are still a good choice especially for the first time home buyer.

Jumbo mortgage loans continue to be low and available to high end borrowers. Come October when the conforming loan limit is reduced, this may change as more mortgages will fall into the jumbo mortgage category making these a bit a more difficult to obtain. Right now, jumbo 30 year fixed mortgage rates are at 5.125%, up .250% from last week. Jumbo 15 year fixed mortgage rates are at 4.500% and jumbo 5/1 adjustable mortgage rates are at 3.625%. Available with 0.7 to 1% origination fee, these are the lowest jumbo mortgage rates that can be obtained by borrowers who have maintained excellent credit.

MBS prices (mortgage backed securities) moved as usual this week depending on what was being reported. These MBS prices affect mortgage rates which move in the opposite direction. Although home prices showed an increase, the Commerce Department reported that May construction spending was down for the sixth straight month. Even though low mortgage rates have been hanging around, mortgage applications continue to be down according to the Mortgage Bankers Association's weekly survey. On the positive side, jobless claims were also down slightly for the week ending June 25 and Equifax reported that consumer credit is continuing to improve. surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard .07 to 1% point origination fee.

Ed Ferrara July 6, 2011

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