Mortgage Rates Decline as Economic Data Continues to Influence Investors

As economic data continues to influence investors with their decisions, mortgage rates declined again last week bringing them to their lowest levels of 2011. Freerateupdate.com's daily survey of wholesale and direct lenders show that conforming 15 year fixed mortgage rates decreased by .125% and are at 3.375%.

This is good news for borrowers who are interested in refinancing for a reduced term from 30 to 15 years. 5/1 adjustable mortgage rates also dropped by .125% and are at 2.625% which should begin to bring some interest back to ARMs. Conforming 30 year fixed mortgage rates are at 4.250%, remaining the same this week. Borrowers need to have good credit to receive these low mortgage rates with 0.7 to 1% origination fee, as well be ready to provide the required documentation that is necessary for lender approval.

Although FHA mortgage rates have been steady for awhile, this is not affecting the popularity that FHA mortgages have gained over the past several years. FHA offers borrowers, especially first time home buyers, benefits that cannot be found with other mortgage loans. Even with a credit score as low as 580, a low down payment of only 3.5% is required. Approved gifts and housing grants are also acceptable making the mortgage transaction even more affordable.

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%. While FHA closing costs (APR) tend to be higher because of the upfront mortgage insurance premium and other applicable FHA fees, the benefits are still drawing borrowers to turn to FHA for their mortgage loans.

Good news rolled in for jumbo mortgage loans this past week when jumbo 30 year fixed mortgage rates dropped by .125% and are currently at 4.875%. Jumbo 15 year fixed mortgage rates are at 4.500% and jumbo 5/1 adjustable mortgage rates are at 3.625%. Jumbo mortgage loans are on the rise as high end borrowers are jumping on these low jumbo mortgage rates while they are here. These are the lowest jumbo mortgage rates available with 0.7 to 1% origination fee to borrowers who have maintained excellent credit and can provide documentation necessary for lender approval.

The jumbo mortgage market is not over saturated at this time because of the higher conforming loan limit which is set to decrease to the original amounts this October. This may change as more homes become part of the jumbo mortgage market again.

Markets continue to be volatile as the European debt crisis continues to be a cause of concern to investors. The U.S. debt ceiling agreement is also creating jitters throughout worldwide markets. MBS prices (mortgage backed securities) have become unpredictable each day as economic data is released. Just as unpredictable are mortgage rates which move in the opposite direction of MBS prices. Last week, China reported positive economic growth while here in the U.S., Ben Bernanke reported that additional stimulus action will be taken if necessary. Weekly jobless claims dropped and homebuilder confidence is up, but neither is doing anything for consumer sentiment which is at the lowest level since March, 2009.

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 .07 to 1% point origination fee.


Written by Ed Ferrara
July 20, 2011

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