Last week, Federal Reserve Chairman Ben Bernanke stated that with an improvement to economic growth and the unemployment situation, the overall economy is closer to being met. According to Bernanke, if mortgage rates increase “for the right reason”, it is a good thing; satisfactory reasons for rates to increase are an improved economic outlook and proper expectations for Fed policy. If the Feds forecast are correct, tapering of bond purchases will begin later this year and will conclude at the middle of next year.
According to the most recent survey of wholesale and direct lenders performed by FreeRateUpdate.com, current conforming 30 year fixed mortgage rates are as low as 4.250% (APR 4.424%), 15 year fixed mortgage interest rates are as low as 3.250% (APR 3.553%) and 5/1 adjustable mortgage rates are as low as 3.125% (APR 3.308%). Low rates are available to borrowers who have good credit and satisfactory qualifications. Existing home purchases rose 4.2% in May and were 12.9% above the same time last year. Even as the housing market changes, the HARP program is still available for underwater borrowers who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009. Rising home prices has reduced the number of underwater borrowers to below 10 million for the first time in three years. However, many of the 19.8% who remain underwater may still be eligible for HARP refinances.
FHA 30 year fixed mortgage rates are as low as 4.250% (APR 4.621%), FHA 15 year fixed rates are as low as 3.250% (APR 3.916%) and FHA 5/1 adjustable mortgage rates are as low as 3.000% (APR 3.345%). FHA mortgages are mainly used by the first time home buyers who combine them with housing grants or loans in order to attain homeownership. FHA still accepts a low down payment of 3.5% and offers many other benefits to homeowners. While the FHA closing costs (APR) are high due to the upfront mortgage insurance premium and other FHA fees, borrowers can use seller concessions up to 6% for these expenses. The FHA streamline refinance with no cash out is a major FHA benefit because it allows a homeowner to move to a better mortgage without the need of a credit history, an appraisal or any other documentation. For homeowners who have loans that were endorsed prior to June 1, 2009, the FHA streamline is available with reduced upfront and annual mortgage fees until the end of 2013.
Jumbo 30 year fixed mortgage rates are as low as 4.250% (APR 4.442%), jumbo 15 year fixed rates are as low as 3.500% (APR 3.665%) and jumbo 5/1 adjustable mortgage rates are as low as 3.125% (APR 3.347%). Jumbo loans with low rates are available for borrowers who maintained a history of excellent credit. While guidelines for these loans are strict, they can also be flexible and will depend on the lender. Lenders are very competitive with jumbo rates which requires borrowers to shop around in order to find the deal they are comfortable having for the long term.
Mortgage backed securities (MBS) prices have an affect on mortgage rates and move them in the opposite direction. Markets were volatile this past week both before and after the Feds meeting. Stocks fell and MBS prices were erratic. There is concern that extreme market turbulence will cause another financial crisis. Mortgage rates have also been fluctuating because of investor concern.
by Ed Ferrara