by Ed Ferrara
Saturday, December 30, 1899
Holding on to record lows, FreeRateUpdate.com's survey of wholesale and direct lenders shows that 30 year fixed mortgage rates are at 3.375%, 15 year fixed mortgage rates are at 2.750% and 5/1 adjustable mortgage rates are at 2.125%, all available with 0.7 to 1% origination fee for well qualified borrowers. For the week ending June 8th, the Mortgage Bankers Association's Weekly Mortgage Applications Survey showed that applications soared with volume up 18.0% on a seasonally adjusted basis. This was the highest level since May 2009.
The Purchase Index increased 13% while the Refinance Index rose 19%. Mortgage refinances accounted for 79% of all application activity. HARP 2.0 has been quickly becoming very popular especially as borrowers are learning the facts and are looking to other lenders for assistance. While HARP was difficult to obtain when first made available, many lenders beyond the big banks are open and willing to help borrowers who are eligible.
Having the option of obtaining HARP information online is also making it easier for borrowers who have become frustrated with searching for a lender. A quick online inquiry, which delivers a response within minutes, is convenient, safe and less time consuming for borrowers. HARP refinances, which often do not require an appraisal, are available for underwater borrowers who have a current mortgage that was sold to Fannie Mae and Freddie Mac prior to June 1, 2009.
Applications for the FHA streamline refinance have also been on the increase since June 11th when lower upfront and annual mortgage insurance premiums for FHA mortgages, endorsed prior to June 1, 2009, became effective. The FHA streamline offers borrowers a quick and easy refinance to lower mortgage rates without the need of verifications or an appraisal. This latest update is expected to help millions of FHA borrowers who will obtain a significant amount of savings by refinancing.
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 adjustable mortgage rates are at 2.625%. FHA also rescinded the questionable credit policy that was implemented on April 1st and quickly put on hold within one week. This policy was targeted to have borrowers pay for any credit accounts that were in default, collection or judgment when the total outstanding balance was over $1,000. After many complaints, the updates were put on hold and the policy was open to questions and opinions.
On Friday, June 15th, FHA released an official mortgagee letter rescinding this policy prior to the July 1st deadline, thus making FHA mortgages once again available to everyone, even those who have some credit blemishes. This move may help increase home purchases by low to middle income families with FHA mortgages and bring FHA back to whom it was initially designed to assist.
Jumbo mortgage rates remained steady this week along with other mortgage rates. Current jumbo 30 year fixed mortgage rates are at 4.125%, jumbo 15 year fixed mortgage rates are at 3.125% and jumbo 5/1 adjustable mortgage rates are at 2.250%. These low jumbo mortgage rates are available with 0.7 to 1% origination fee to well qualified borrowers.
The jumbo mortgage market is still much smaller than the conforming and FHA markets for application volume. The increase in the FHA loan limit to $729,750 has also helped keep jumbo mortgage volume down. Since jumbo mortgages have stricter guidelines, having other options has been helpful for borrowers. Jumbo mortgages require excellent credit and qualifications for approval, but guidelines for approval are often different from lender to lender.
MBS prices (mortgage backed securities), which move mortgage rates in the opposite direction, once again did not have any major swings that were significant enough to bring a change in mortgage rates. Reporting for the week included weekly jobless claims which rose above expectations and showed a struggling job market with weak job creation.
The data for May shows mostly declines with Import Prices dropping 1.0%, PPI declining 1.0%, Retail Sales dropping 0.2%, CPI fell 0.3% and a drop in Industrial Production. According to the Thomson Reuters/University of Michigan's preliminary survey, consumer sentiment fell in June to 74.1 from 79.3 in May. Investors are hoping that these reports will make the Feds open to more monetary easing here in the U.S. The victory for the conservative party in Greece did not result in any type of market rally since there is still no solution to the ongoing problem. Now, Spain's borrowing rates have moved up to levels that caused other countries to seek a bailout. Investors continue to be cautious about the financial crisis in Europe and the threat to the global community.
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