Mortgage Rates Remaining Low While European Troubles Persist
by Ed Ferrara
It may be a New Year, but European troubles continue to persist which is helping mortgage rates to remain low. Markets remain quiet as investors await fourth quarter earnings which will begin to be released. With not much activity for the first week of 2012, Freerateupdate.com's weekly survey of wholesale and direct lenders show that there have not been any changes to mortgage rates. Current 30 year fixed mortgage rates are at 3.500%, 15 year fixed mortgage rates are at 2.875% and 5/1 adjustable mortgage rates are at 2.250%. These are the lowest conforming mortgage rates available with 0.7 to 1% origination fee to well qualified borrowers who have a consistent history of good credit. While the Mortgage Banker's Association reported that overall mortgage activity declined for the two week period around the holidays, refinances continue to be strong as low mortgage rates continue to be persistent. Most of the housing reports that have been released show an improvement in this sector of the economy as record low mortgage rates dominated the past year. Looking forward, rents are beginning to increase which may bring consumers back to the housing market at a faster pace.
FHA recently extended their anti-flipping policy waiver in the hopes of bringing stability to the real estate market and communities across the country. By allowing investors to purchase, renovate and quickly sell homes to home buyers using FHA mortgages, FHA hopes to increase home purchasing of affordable homes in the coming year. Current FHA 30 year fixed mortgage rates are at 3.250%, FHA 15 year fixed mortgage rates are at 2.750% and FHA 5/1 adjustable mortgage rates are at 2.750%. Since many first time home buyers choose FHA mortgages because of the low down payment requirements, flipping affordable homes is necessary while low FHA mortgage rates are still available and home prices are still down. FHA also allows borrowers to use down payment assistance from local and state housing initiatives, as well as, gifts from approved sources which helps borrowers who may not have enough cash for the transaction. While FHA closing costs (APR) may be higher because of various FHA fees and the upfront mortgage insurance premium, seller concessions up to 3% can still be used to help pay for these expenses.
The jumbo mortgage market is doing well since high end borrowers continue to enjoy low jumbo mortgage rates which have remained consistent. Jumbo 30 year fixed mortgage rates are at 4.125%, jumbo 15 year fixed mortgage rates are at 3.375% and jumbo 5/1 adjustable mortgage rates are at 2.500%. Although all real estate has been affected, movement in this market has been better than regular housing. Many high end borrowers are self employed and are able to take advantage of these low jumbo mortgage rates that have been available for the past year with 0.7 to 1% origination point. Excellent credit and the required documentation are also necessary in order to receive lender approval.
As European financial problems continue to weigh heavily on global markets, investors have been slow to react to positive data here in the U.S. With the absence of any rally, MBS prices have been flat which is keeping mortgage rates steady. Mortgage rates move in the opposite direction of MBS prices. According to the Commerce Department, construction spending and Factory Orders rose in November. The Institute of Supply Management reported that U.S. manufacturing rose in December. Overseas manufacturing in China, Australia and India also showed strong improvement. The big news was the employment report which showed an increase of 200,000 jobs and a drop in the unemployment rate, both of which did little to spur investor reaction. Until the current Euro zone crisis has a substantial solution in place, investor tension will continue which will keep low mortgage rates stable.
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 .07 to 1% point origination fee.
Published: January 11, 2012
http://realtytimes.com/rtpages/20120111_rateupdate.htm
Brent Hammonds, Associate Broker, CDPE
Solutions Real Estate, LLC
9375 E. Shea Blvd STE 251
Scottsdale, AZ 85260
Phone: 602-717-3219
Fax: 877-500-1776
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