Mixed News Keeps Low Mortgage Rates Stable

For the past week, mixed economic news that continues to lead the headlines has helped to keep low mortgage rates stable. Financial troubles in Europe has left investors busy each day waiting to see if Greece will default or a rescue plan will be implemented. Here in the U.S., even a negative report that is not considered terribly bad is spreading optimism to the markets making any predictions unreliable.

Although seesawing market movements can be stressful for watchers, Freerateupdate.com's daily survey of wholesale and direct lenders show that the back and forth actions of investors is actually keeping mortgage rates at the same level. Current 30 year fixed mortgage rates are at 3.875%, 15 year fixed mortgage rates are at 3.250% and 5/1 adjustable mortgage rates are at 2.625%. If you have been watching mortgage rates and their fluctuations, then you are aware that mortgage rates have reached historic lows.

Not knowing what direction they will head is probably the best incentive for borrowers to get their mortgage application in motion. With good credit, borrowers can obtain these low mortgage rates with 0.7 to 1% origination fee. Of course, income will need to be verified and other documentation will need to be checked to receive lender approval. Whether you are buying a home or refinancing an existing mortgage, there has never been a better opportunity to receive the lowest mortgage rates available.

FHA has been keeping busy especially with first time home buyers. First time home buyers turn to FHA because no other mortgage loans offer a down payment of 3.5%. Even with credit as low as 500, FHA will accept a down payment of 10%. Then there are the low FHA mortgage rates that are offered and are not based on credit scores. Current FHA 30 year fixed mortgage rates are at 3.750%, 15 year fixed mortgage rates are at 3.500% and FHA 5/1 adjustable mortgage rates are at 2.750%. FHA does have higher closing costs (APR) because of the upfront mortgage insurance premium and other FHA fees. To help with this issue, FHA mortgages allow seller concessions, gifts and housing grants to be part of the mortgage transaction. FHA mortgages have been leading in mortgage applications even when overall mortgage application activity has decreased.

After almost two weeks into the decreased conforming loan limit, low jumbo mortgage rates are doing just fine and have been somewhat stable, along with other mortgage rates. Jumbo 30 year fixed mortgage rates continue to fluctuate and are currently at 4.750%. Jumbo 15 year fixed mortgage rates are at 4.375% and jumbo 5/1 adjustable mortgage rates are at 3.250%. With more properties now falling back into the jumbo mortgage market, it is important that borrowers have these low jumbo mortgage rates still available. Borrowers will need to have excellent credit to obtain these lowest jumbo mortgage rates with 0.7 to 1% origination point. Jumbo mortgages are not government insured so lenders want to be sure that borrowers are well qualified.

Recent volatility has been keeping markets extremely busy for the past week. MBS prices (mortgage backed securities), which move mortgage rates in the opposite direction, have been on another roller coaster. With daily increases and decreases, no major changes have occurred with mortgage rates which have ended up just sitting still. This week, Fed Chief Ben Bernanke told lawmakers that the Feds are prepared to put in additional help to aid the economic recovery. Investors saw some light at the end of the tunnel after the Institute of Supply Management reported an increase in the service sector work force. Jobless claims rose to 401,000 for the week ending October 1st which was right around what was expected while the Labor Department reported that 103,000 jobs were added in September. This was all positive news for investors who have also been watching the Euro zone crisis closely. Friday's downgrade of Spain and Italy only added more concern about Europe's financial problems. Despite what has been going on, stocks have seen some needed increases while, at the same time, mortgage rates have remained low. Coming up this week, third quarter earning reports will begin to trickle in and, again, may cause a lot of volatility.

Published by Realty Times
Written by Ed Ferrara
October 12, 2011

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