Estimated Rates for the week of March 8, 2010*:
30 yr fixed: 4.75 - 5.00
FHA/VA: 4.75 - 5.00
OR VA: 4.50 w/1.5 pts; 4.625 w/1.0 pt.
Jumbo (30 yr fixed): 5.50 - 5.75
5/1 ARM: conforming 3.625 - 4.000; jumbo 3.875 - 4.250
Rates are still in great shape. We remain in our narrow range and most think we'll stay this way at least through month-end. We still don't know what will happen when the Fed stops buying mortgage backed securities at the end of March. Most in the market thought that we would see a small increase in rates due to a widening spread between mortgages and U.S. Treasuries. So far, that's not happening. In fact, the spread is narrowing and that's helping to keep rates down. Economic data is coming in mixed but we are seeing signs that the overall economy seems to be improving. I keep my eye on the Consumer Credit report as a way to see if the consumer is out spending. For the first time in 12 months the report showed that consumer credit expanded. What was expected to show a contraction of approximately $6 billion, the report showed that consumer loans increased by almost $5 billion. Although credit card debt was down, personal loans jumped. This could be a sign that the American consumer is feeling more comfortable with the economy and is willing to spend. Remember, over 65% of economic activity in the U.S. is derived from consumer spending.
There has been a lot of discussion about changes in terms and costs with FHA loans. About forty percent or more of the business is going FHA so this is a much discussed topic. So far, we are being told that there will be no change in the minimum down payment requirements - it will remain at 3.5%. The mortgage insurance premiums will be increasing though. The upfront fee of 1.75% will probably be increasing to 2.25% - it's a big increase but it is still able to be included in the loan amount. The annual fee will increase too. Currently, with the minimum down payment, the fee is .55% on an annual basis, paid monthly. We are hearing that this may go to .85%. On a home sold for $200,000 the increase in the loan amount due to the financed up front premium is $965.00 and the total PIMI (principal, interest, and mortgage insurance) goes up by about $55.00 (using a 5% rate on a 30 year term). Although it will hurt a few personal budgets, I am all for it if it keeps FHA financially sound. FHA is an extremely important source of funding for us in the real estate business!
Good news on mortgage activity.....the weekly mortgage loan application report for the week ending February 26, 2010 showed that the Market Composite Index, a measure of mortgage loan application volume, increased 14.6% from one week earlier. The Refinance Index increased 17.2% from the previous week and the seasonally adjusted Purchase Index increased 9.0% from one week earlier. The refinance share of mortgage activity increased to 69.1 percent of total applications from 68.1 percent the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.95% from 5.03%, with points decreasing to 0.99 from 1.34 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.27% from 4.35%, with points increasing to 1.36 from 1.31 (including the origination fee) for 80% loans.
Enjoy the rest of your week!
Bob Chiodo, CFP
Equity Home Mortgage, LLC
12550 SW 68th Parkway
Portland, OR 97223
Ofc 503.670.7393
Fax 503.670.7062
*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Credit scores, down payment, and other risk related issues may change the rate. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

