It is now obvious that the Euro zone financial crisis did not end with the Greece debt swap that took place recently. This week, Spain has become the latest region of concern as bond yields for that country rose to over 6 percent. In the background, Italy continues to be watched very closely as the financial situation there is also not very stable.
With all of this happening in Europe, worldwide investors are becoming cautious once again as they watch this new scenario play out and the impact it may have on other economies. Here in the U.S., mortgage rates are staying low on these renewed Euro zone debt concerns and have investors turning back to the safety of government bonds. Freerateupdate.com's survey of wholesale and direct lenders shows that all mortgage rates, except jumbo 30 year fixed mortgage rates, have been steady throughout the week. Current 30 year fixed mortgage rates are at 3.750%, 15 year fixed mortgage rates are at 3.000% and 5/1 adjustable mortgage rates are at 2.375%, all of which are available with 0.7 to 1% origination fee for well qualified borrowers.
According to the Mortgage Banker's Association's Weekly Mortgage Applications Survey for the week ending April 6th, mortgage applications were down 2.5 percent. This could be due to both the holiday week and being the first week of the month, since most closings take place towards the end of each month. Of this number, the Refinance Index fell 3.1 percent and the seasonally adjusted Purchase Index dropped 0.5 percent. Refinances should begin to increase as more existing borrowers head for the Harp 2.0 program which is for underwater borrowers who have loans with Fannie Mae and Freddie Mac. Borrowers can search Harp 2.0 mortgage rates online in order to compare what lenders are offering.
FHA has now delayed implementing the latest credit qualifying guidelines until July 1, 2012. These guidelines are for borrowers who have default and/or collections totaling $1,000 and above. Until July, FHA will be taking comments and concerns into consideration while clarifying their guidelines. Current FHA 30 year fixed mortgage rates are at 3.375%, FHA 15 year fixed mortgage rates are at 2.875% and FHA 5/1 adjustable mortgage rates are at 2.875%. FHA's streamline refinance with no cash out will have reduced upfront and annual mortgage insurance premiums effective June 11, 2012. Any borrower who has already submitted a mortgage application, but has not closed, can have the lender cancel their FHA case number so that they can take advantage of these latest changes when they are in effect. Until that time, there will be a drop in applications for FHA refinances as everyone waits this time out in order to get the better deal. For normal FHA mortgages, the closing costs (APR) are high because of the upfront mortgage insurance premium and other FHA fees, but FHA allows these expenses to be added to the mortgage amount as long as the necessary loan to value remains in place.
The only change seen this week was for jumbo 30 year fixed mortgage rates which are now at 4.250%. Remaining the same, jumbo 15 year fixed mortgage rates are at 3.375% and jumbo 5/1 adjustable mortgage rates are at 2.500%. These low jumbo mortgage rates are available with 0.7 to 1% origination fee for borrowers who have maintained excellent credit. Jumbo mortgages, which are necessary for mortgage financing above the conforming and FHA loan limits, usually have stricter guidelines that are set by the lender. Since these are risky loans, lenders require larger down payments and additional month of reserves in order to reduce their exposure.
Average mortgage rates, which move in the opposite direction of MBS prices, remained stable since MBS prices (mortgage backed securities) were mostly up this week. Data released showed Import Prices for March increased 1.3% which was higher than expectations. PPI Inflation minus energy and Core PPI were both higher than expected, while March PPI was flat.
The Trade Deficit was smaller than predictions and U.S. Exports increased to an all time high. Jobless claims rose to the highest level since January and influenced Consumer Sentiment which fell according to The Thomson Reuters/University of Michigan's preliminary index. Despite this, retail sales rose 0.8% in March. In the housing market, Builder Confidence fell for the first time in seven months according to the National Association of Home Builders. While European issues continue to influence investor decisions, economic growth data for China, which came in weaker than expected, also affected markets this week. Corporate earnings will continue to be released, but are having little influence on market decisions.
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.