Keeping Mortgage Rates Low Spurs Housing Market Recovery
by Ed Ferrara
The housing market has returned to life this year as improvements continue to be seen in a variety of sectors. With the third quarter behind us, consumer attitudes have changed for the better as shown by the Thomson Reuters/University of Michigan preliminary reading of consumer sentiment which came in at 84.9, the highest level in five years.
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Through this survey, consumers revealed a better outlook towards employment and the overall economy. The release of the Department of Treasury and the Housing and Urban Development October Edition of the Obama Administration Housing Scorecard shows that the Federal Housing Finance Agency’s housing price index posted the largest annual gain in five years. Along with this, new home sales are at the fastest pace since April 2010. Because of these gains, the scorecard indicates that 1.3 million additional are now above water with their mortgages.
Mortgage rates have been consistently low throughout the year and should continue to do so now that QE3 is in place and active. With QE3, the Feds are purchasing $40 billion worth of mortgage backed securities each month so that mortgage rates will remain low in order to allow consumers to re-enter the housing market at affordable levels. According to FreeRateUpdate.com’s survey of wholesale and direct lenders, mortgage rates continue to remain low with 30 year fixed mortgage rates as low as 3.000%, 15 year fixed mortgage rates as low as 2.250% and 5/1 adjustable rates as low as 1.875%.
Borrowers must have good credit to receive these lowest mortgage rates available. While home purchase loans and traditional mortgage refinances require complete documentation, verification by the lender and an appraisal, HARP 2.0 requirements are different. HARP 2.0 is the non-traditional refinance for borrowers who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009. This program does not have loan to value caps and does not require an appraisal, in most cases, as it’s main purpose is to help underwater borrowers.
While some borrowers may no longer be underwater, they may still be eligible for HARP 2.0 as long as the loan to value is no less than a minimum of 80%. HARP has proven to be a great program that helps homeowners gain back equity at a faster pace. With so many homeowners still eligible for HARP 2.0, our online form is available for submission and will return a response almost immediately.
There is no doubt that the Federal Housing Administration (FHA) has been a major player in the housing market recovery. For many consumers, FHA is the only means of obtaining a mortgage in today’s environment. FHA’s role in housing has increased since the housing crisis of several years ago and is still a favorite with first time home buyers. Continuing to have flexible credit guidelines, multiple mortgage programs and low down payment requirements has allowed many consumers the opportunity to become homeowners even at a time when credit is tight.
FHA mortgage rates are at historical levels with FHA 30 year fixed mortgage rates as low as 2.750%, FHA 15 year fixed mortgage rates as low as 2.250% and FHA 5/1 adjustable mortgage rates as low as 2.250%. Although FHA closing costs (APR) are high due to various FHA fees and the upfront mortgage insurance premium, FHA allows these costs to be added to the mortgage amount in most cases. Allowable seller concessions can also be used to help pay closing costs.
Many homeowners have used the FHA streamline refinance this year to trade their higher rate mortgages to lower mortgage rates. This program does not require an appraisal, credit or any other documentation, but does require a good mortgage payment record with no late payments for the previous year.
Homeowners who have loans that were endorsed prior to June 1, 2009 can use the FHA streamline and also get lower upfront and annual mortgage insurance premiums which make this refinance move even more affordable. Borrowers can find out more information about this program through our online form which does not require a social security number when submitting.
For the past week, jumbo mortgage rates remained the same. Jumbo 30 year fixed mortgage rates are as low as 3.250%, jumbo 15 year fixed mortgage rates are as low as 2.750% and jumbo 5/1 adjustable mortgage rates are as low as 2.125%. Excellent credit is required in order to obtain jumbo mortgages with these lowest jumbo mortgage rates.
As housing recovers, the jumbo mortgage market is becoming more competitive. Although guidelines are strict, some lenders will be flexible with well qualified borrowers. The second half of this year has seen an increase in high end property sales as borrowers are reacting to rising home prices. Jumbo mortgage borrowers should do their homework and shop around in order to receive the lowest jumbo mortgage rates and best available terms.
The elections last week created several days of volatility in markets. Stock slid down and MBS (mortgage backed securities) rose. Mortgage rates are affected by MBS prices and move in the opposite direction. The Commerce Department reported that exports from the U.S. rose to a record in September and contributed to an unexpected decline in the trade deficit which helped to boost the U.S. economy at the end of the third quarter. Unemployment claims fell by 8,000 for the week ending November 3rd, according to the Labor Department. Now that the election is over, the fiscal cliff will be the main topic influencing investor decisions until a compromise or solution is in place.
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 about a 1 point origination fee.
Posted on November 14, 2012 at 2:10 pm by DeAnna Greenwood