Last Thursday, the Feds announced their latest plan to aid economic growth and the stagnant unemployment rate. While the economy has been in the midst of a moderate recovery, unemployment has been stubbornly high and has become a "grave concern" to the Feds and consumers as well. By implementing QE3, the Feds will be purchasing mortgage backed securities which will, in effect, continue to keep mortgage rates down. By doing so, it is hoped that more consumers will purchase homes, spend money and get the economy moving.
This action, if it works according to plan, could also increase the need for workers in the housing industry which could ultimately lead to lower unemployment. With QE3, low mortgage rates can possibly last for several years, but that will depend on the state of the economy. FreeRateUpdate.com's survey of wholesale and direct lenders shows that mortgage rates remained steady this past week with 30 year fixed mortgage rates at 3.375%, 15 year fixed mortgage rates at 2.750% and 5/1 adjustable mortgage rates at 2.125%.
These are the lowest mortgage rates available with 0.7 to 1% origination fee for borrowers who have good credit. Full documentation and verification is necessary for home purchase loans and traditional mortgage refinances. For borrowers who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009, the non-traditional refinance, HARP, is available and does not require the need of an appraisal. While HARP does not have loan to value caps, it does have a minimum LTV of 80% at this time.
Lawmakers are in the process of trying to make HARP available to everyone, regardless of loan to value. Guidelines for HARP often differ from lender to lender depending on their individual overlays and restrictions. For this reason, eligible borrowers should continue to seek a HARP approval even after being denied by a lender. More information about HARP can be obtained by submitting the online inquiry which does not require a social security number.
FHA mortgage business has been booming with both home purchase loans and streamline refinances. 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%. First time home buyers are making FHA loans more popular than ever because of the low down payment requirements and easier credit qualifying when compared to conforming mortgages. FHA loans can also be combined with housing grants or loans that are offered through local or state housing initiatives.
It is well known that FHA closing costs (APR) are high because of various FHA fees and the upfront mortgage insurance premium, but these costs are usually added to the loan amount or covered through seller concessions. The FHA streamline refinance with no cash out is the popular FHA product that does not require any documentation or an appraisal, but borrowers must have a history of on time mortgage payments with FHA.
This streamline now has reduced upfront and annual mortgage insurance premiums for loans that were endorsed prior to June 1, 2009. According to government data, lenders refinanced 42% more FHA (Federal Housing Administration) streamline refinances in July than the month earlier as homeowners take advantage of these reduced fees and low FHA mortgage rates through this quick and easy process. For more information about FHA mortgage products, the online form is available for submission and will return a response almost instantly.
Jumbo mortgage rates have remained steady with jumbo 30 year fixed mortgage rates at 4.125%, jumbo 15 year fixed mortgage rates at 3.125% and jumbo 5/1 adjustable mortgage rates at 2.250%. With a history of excellent credit, borrowers can obtain these lowest jumbo mortgage rates with 0.7 to 1% origination fee. Jumbo mortgage guidelines are generally stricter than conforming mortgages and require proof of substantial assets that are required for the larger down payments and additional months of reserves.
Documentation requirements are usually the same as what is required with conforming mortgages. The jumbo mortgage market has been on the increase as high end property sales have become popular. More enders have begun to enter this market which, while it may be risky, is also very profitable. As competition increases, jumbo mortgage borrowers may find that guidelines may become somewhat flexible as lenders compete for business.
After the Fed announcement of QE3 last week, both the stock market and MBS surged. On the average, mortgage rates remained the same. The main concern at this time continues to be high unemployment and the lack of jobs. The Labor Department reported that jobless claims once again increased to 383,000 for the prior week which was higher than expectations.
At the same time, Consumer Sentiment rose to 79.2, the highest since May, as reported by The Thomson-Reuters/University of Michigan Consumer Sentiment Index. While there are plans for a European bailout by the European Central Bank, progress is slow which continues to weigh heavily on markets while also creating investor anxiety. Turmoil in the Middle East and North Africa, as well as, tensions between Japan and China, are all causing a cautious approach to any decisions, whether by investors or consumers.
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.
Published: September 19, 2012
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