The bond market finished the week 31 points up – keeping rates basically the same, but improving the costs of a loan by approximately .25% of total loan amount. 30 year fixed par rates are still sitting at 4.75%. 15 year fixed FHA loans actually price so much better than 15 year fixed conforming loans – that it is more beneficial to go FHA – 15 year fixed FHA’s are starting at 3.75%. 5/1 ARMS still at 3.125% and 7/1 ARMS at 3.625%.
The Fannie Mae and Freddie Mac risked based pricing hits I warned about are now in effect with every lender that I have seen. Over 75% loan to value , lower credit scores, and cash out refinance customers will be all effected in a negative way.
In housing news, home sales showed a large increase in December. Unfortunately, it was also reported that home prices are at the lowest levels now since the housing crisis began. It’s a great time to buy now and get an unbelievable deal. It’s also a good time to refinance – with housing prices falling and pricing hits now in effect for higher loan to value loans, you could get a worse priced loan in the future simply by your home dropping in value.
Not much movement in the rate markets last week. 30 year fixed par rates still holding steady at 4.75% – usually having to pay a portion of point to get that rate. 15 year fixed have settled in at 4.25% and 5/1 ARMs at 3.25%.
Those looking for a more stable loan below 4% are increasingly looking at 7/1 ARMs and 10 year fixed loans. 7/1 ARM par rates start at 3.625% and 10 year fixed loans start at 3.75%.
Remember that Fannie Mae and Freddie Mac will be implementing more risk based pricing hits in the near future – these will hurt customers with these characteristics:
- Loan to values 75% or over
- Lower credit score borrowers
- Cash out refinance
I would recommend locking these type of loans so you don’t get hit by these pricing changes.
I touched on this two weeks ago and it bears repeating. Many customers will see a large increase in pricing in the very near future. Loan level price adjustments with Fannie Mae and Freddie Mac will be going into effect for loans sold to these agencies as of April 1st, 2011. Lenders will make price adjusments in advance of this to assure they can get their loans to these agencies in enough time without taking a hit to their profitability. These changes will go into effect with most lenders by the end of January 2011.
Customers that will be affected have these characteristics:
- Higher Loan to value loans – you will get a pricing hit regardless of credit.
- Less than 720 FICO scores – large hit in pricing
So the vast majority of customers will see increased pricing on their mortgage quotes in the very near future. Loan to values of 70% and higher are going to see large hits and customers with less than perfect credit scores will see very large hits. If you are waiting to lock a purchase loan or to refinance , you may not want to wait much longer if you fit into the loan descriptions above. Please email me if you would like to see the Fannie Mae announcement so you can review the pricing adjustments.
There was not much movement in rates this week with the bond market staying relatively stable – 30 year fixed par rates are at 4.75% , 15 year fixed at 4.125% , 5/1 ARMS at 3.25%. We did see a nice improvement in 20 year fixed loans dipping down to 4.5%
The big news this week in regards to mortgage rates was the unemployment reports. Unemployment dropped .4%, from 9.8% to 9.4%. Though the number sounds good, it didn’t boost the stock market due to the amount of people getting out of the job market. An unemployed person is defined by someone looking for work that is not working. If you are not looking , you are not considered unemployed. This report gained some momentum in the bond market as the economy is still recovering at a very slow pace. The market took money out of stocks and into bonds – lowering rates last week.
As of Monday morning – 30 year fixed par rates dropped to 4.625% , 15 Year Fixed to 4.125% and 5/1 ARM loans to 3.25%. Overall a good improvement in rate/pricing. This is the best I have seen rates in 2-3 weeks.
Here is a link on what one expert thinks will happen with the mortgage market in 2011. http://www.msnbc.msn.com/id/40913669/ns/business-real_estate/ . I agree with all points except the last one – loans can still be done in a timely manner.
Rates start off the new year solid. 30 Year Fixed par rates are still at 4.75% , but with a decent yield spread premium so most will require a low amount of origination fees for this rate. 15 Year Fixed rates down to 4.125% and 5/1 ARMs have hit 3.25% again. Keep in mind every loan prices different based on a borrowers specific situation.
Big News in loan pricing. Fannie Mae is chaning the pricing on loans over 70% loan to value. This means if you fall into a loan to value range of 70-80%, your loan will begin to price worse soon. If this is the case, you may want to try and get something started before the pricing changes go into effect.
November’s housing data reports show existing single family residence sales up 5.5%. This is much better than the 10% decrease we saw in October’s reports. I still remain skeptical that we are on the route to recovery. Until this foreclosure / short sale situation is more resolved, I don’t see significant improvement in the housing market – specifically in regards to home values.