Thursday, May 10, 2012

MORTGAGE & FINANCE: Record Low Mortgage Rates

With a week of mixed reports being released, it was clear that more consumers are seeking a home purchase with low mortgage rates at this time. According to the National Association of Realtors, Pending Home Sales which are actual contract signings, increased 4.1 percent for the month of March. This number is 12.8 percent higher than March of 2011 and is an indication of improvement in the real estate market.'s survey of wholesale and direct lenders shows that mortgage rates continued to remain the same throughout the past week with conforming 30 year fixed mortgage rates at 3.750%, 15 year fixed mortgage rates at 3.000% and 5/1 adjustable mortgage rates at 2.375%, all available with 0.7 to 1% origination fee to borrowers who have good credit and qualifications. With a large number of existing borrowers seeking to refinance through Harp 2.0, the current housing market may very well get tighter as more homeowners remain in their homes.New Home Sales did not do as well and actually decreased 7.1 percent after revised February's numbers were increased. Even with a decrease, New Home Sales were 7.5 percent higher than in March, 2011. While the prices of existing homes remains down, borrowers have started to take action.

Harp 2.0 is quickly becoming a great success with the latest improvements made to the original Harp guidelines. With no maximum loan to value ratio, borrowers are able to refinance their current Fannie Mae or Freddie Mac mortgage to lower mortgage rates, often without the need of an appraisal. In the end, millions of borrowers will be helped with a Harp mortgage refinance between now and December 31, 2013. Borrowers who have been denied should not give up, but should seek Harp 2.0 information online for another lender who will perform the refinance. This has become the easiest and quickest way to apply for a Harp loan.

After having a surge of applications in March, FHA mortgages are somewhat quiet due to the increase in upfront and annual mortgage insurance premiums which took place on April 9th. Current FHA 30 year fixed mortgage rates are at 3.375%, FHA 15 year fixed mortgage rates are at 2.875% and FHA 5/1 adjustable mortgage rates are at 2.875%. FHA borrowers find that there are several different mortgage programs depending on their needs.

The biggest draw to FHA mortgages is the low down payment requirements that can come
from approved gifts and housing grants or loans. The recent increase in the FHA upfront mortgage insurance premium, along with the normal FHA fees, will raise FHA closing costs (APR), but this is allowed to be added to the mortgage amount as long as the loan to value requirements are met. Existing FHA mortgage borrowers now have the updated FHA Streamline Refinance coming in June which has reduced upfront and annual mortgage insurance premiums. This is another FHA loan program that is sure to become successful.

Jumbo 30 year fixed mortgage rates are at 4.250%, jumbo 15 year fixed mortgage rates are at 3.375% and jumbo 5/1 adjustable mortgage rates are at 2.500%, all available with 0.7 to 1% origination fee for borrowers who have maintained a history of excellent credit. Jumbo mortgages are not as popular as conforming and FHA mortgages since they are for higher priced homes which involve a large sum of money. These mortgages require strong qualifications that can be substantiated through documentation which will be verified by the lender. Lenders are stricter with jumbo mortgages because they are considered private loans that are not government insured or sold to Fannie Mae or Freddie Mac.

Considering the increase in the stock market last week, MBS prices did not move enough to cause mortgage rates to fluctuate. MBS prices affect mortgage rates which move in the opposite direction. Consumer Confidence dropped slightly in March as consumers continue to be optimistic yet cautious about the direction of the economy.

The S&P/Case Shiller home price index of 20 cities showed a 3.5 percent decrease from 12 months earlier. Jobless claims decreased, but were still higher than predicted. The Fed's meeting last week did not reveal anything new to investors. They stated that the economy continues to grow at a moderate pace, although they are concerned about any repercussions that may happen from Europe's financial troubles. The GDP increased 2.2% in the first quarter while Consumer Sentiment and Personal Income are both up. 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 0.7 to 1% point origination fee.

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