Applications for New Home Sales Rise; Rates Find Stable Ground

According to the Mortgage Bankers Association's Builder Application Survey, applications for new home sales for the month of July rose by 14%. Of this amount, 66.5% were for conventional loans while 17.7% were FHA loans. VA loans represented 14.5% of total applications. In addition, the average loan size for new homes in July rose to $288,382. In the meantime, mortgage rates have found some stable ground over the past week as markets have calmed.

According to the most recent survey of wholesale and direct lenders performed by FreeRateUpdate.com, current conforming 30 year fixed mortgage rates decreased and are now as low as 3.750% (APR 3.99%); 15 year fixed mortgage interest rates are as low as 2.750% (APR 3.187%) and 5/1 adjustable mortgage rates are as low as 2.375% (APR 2.651%). Borrowers who retain good credit will find that low rates are still available. Loan approval also requires documentation for employment, income and assets, all of which will be verified by the lender.

According to the Mortgage Bankers Association, the Market Composite Index increased 0.2% on a seasonally adjusted basis for the week ending August 2nd. Home purchases continue to improve and is shown with an increase of 1% in the Purchase Index on a seasonally adjusted basis which is 8% higher than a year ago. Refinance activity remained that same and represented 63% of all application activity. However, while HARP refinances have been on the increase, last weeks volume dropped from 37% to 36%. The HARP loan program continues to provide an avenue to refinance for underwater homeowners who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009.

Current FHA 30 year fixed mortgage rates also decreased and are now as low as 3.625% (APR 4.017%); FHA 15 year fixed rates are as low as 3.250% (APR 3.856%) and FHA 5/1 adjustable mortgage rates are as low as 2.500% (APR 2.925%). Last week, President Obama called for strengthening the role of FHA while winding down both Fannie Mae and Freddie Mac. FHA has for many years been the backbone of financing for low to middle income families and offers many benefits to those who utilize one of the many mortgage programs offered.

However, FHA closing costs (APR) are higher because of the upfront mortgage insurance premium and other FHA fees. Despite this, borrowers are allowed to use seller concessions for this purpose. In addition, the FHA streamline program has been available for many years and offers FHA borrowers a way to refinance without the need of an appraisal or any other documentation. Until the end of 2013, FHA is also offering reduced upfront and annual fees for those who have loans that were endorsed prior to June 1, 2009.

Jumbo 30 year fixed mortgage rates are as low as 4.125% (APR 4.39%), jumbo 15 year fixed rates are as low as 3.125% (APR 3.441%) and jumbo 5/1 adjustable mortgage rates are as low as 2.500% (APR 2.681%). In order to receive low jumbo rates, borrowers must have excellent credit and the ability to document employment, income and assets that are necessary for lender approval. While lenders can be very competitive with jumbo loans, the guidelines will often differ with some even offering flexibility for quality jumbo loans. Borrowers should shop around for multiple deals prior to making a decision.

Mortgage rates move in the opposite direction of MBS prices (mortgage backed securities) which are affected by market conditions. Over the past week, mortgage rates were less volatile as markets calmed after the end of month reports. Jobless claims came in higher at 333,000 for the week ending August 3rd, but still remained close to a five year low.

FreeRateUpdate.com researches and reports advertised rates of active lenders within the FreeRateUpdate.com network.

Published: August 14, 2013
Use of this article without permission is a violation of federal copyright laws.