Volatility Keeping Low Mortgage Rates on Track
by Ed Ferrara
Thursday, June 14, 2012
While the purchase index decreased slightly, mortgage refinances were up 2%. FreeRateUpdate.com's survey of wholesale and direct lenders shows that mortgage rates remained stable over the week with 30 year fixed mortgage rates at 3.375%, 15 year fixed mortgage rates at 2.750% and 5/1 ARM loan rates at 2.125%, all of which are available with 0.7 to 1% origination fee to well qualified borrowers.
High affordability for a home purchase may bring some positive action as the active summer buying season begins at the end of this month. Home buyers need stable employment and income, enough assets for the closing and reserves, as well as, good credit in order to receive lender approval. Current homeowners who have mortgages with Fannie Mae or Freddie Mac are finding that HARP, the Home Affordable Refinance Program, is helping them to refinance to lower mortgage rates, thus avoiding a future foreclosure, short sale or strategic default.
To be eligible for HARP, the existing mortgage must have been sold to either of these GSE's prior to June 1, 2009. It is easy to find out HARP other information with a quick online inquiry that returns a response within minutes. HARP inquiries online are more successful because there are more lenders available in one place and at one time who are eager and willing to assist borrowers with their needs.
The FHA Streamline Refinance with reduced upfront and annual mortgage insurance premiums is now underway and is expected to bring in millions of FHA refinances until the end of 2013. This program is now available to FHA borrowers who have mortgages that were endorsed prior to June 1, 2009 and is expected to be a huge success. While the program does not allow for cash out, it also has no verifications required which means that even borrowers who have lost income can be approved.
Due to the amount of borrowers applying for this FHA loan program, using an online inquiry that does not require a social security number can produce the quickest results to a lower FHA mortgage rate. Current FHA 30 year fixed mortgage rates are at 3.125%, FHA 15 year fixed mortgage rates are at 2.625% and FHA 5/1 ARM loan rates are at 2.625%. FHA purchase mortgages have dropped since the increase in the upfront mortgage insurance premium on new loans which makes FHA closing costs high, however, borrowers need to know that in most cases these expenses can be added to the mortgage amount.
Jumbo mortgage rates have also remained stable for the week with jumbo 30 year fixed mortgage rates at 4.125%, jumbo 15 year fixed mortgage rates at 3.125% and jumbo 5/1 ARM loan rates at 2.250%. These are the lowest jumbo mortgage rates available with 0.7 to 1% origination fee for borrowers who have maintained excellent credit. Jumbo mortgage rates have been significantly low for high end borrowers and are obtainable provided that substantially good qualifications for employment, income and assets are in order. A larger amount of assets may be required for higher down payments and additional months of reserves since these are private loans with lenders. Guidelines can be stricter since lenders want to reduce their risk when giving an approval.
MBS prices, which move mortgage rates in the opposite direction, did not suffer any major changes this past week keeping mortgage rates stable. The biggest news is coming from the continued financial crisis in the Euro-zone. Greece also has another election coming up this weekend. China had an unexpected rate cut last week in order to boost economic growth, which came as a surprise to investors who are concerned about any slowdown in China. Fed Chairman Ben Bernanke disappointed investors when he made no promises for further assistance, but is prepared to act, if necessary, to protect the financial system and the U.S. economy. Markets will continue to be volatile while this financial uncertainty remains worldwide.
FreeRateUpdate.com 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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