The past two weeks we have seen mortgage rates fall for a few days to the low points we saw back in January only to jump back up to the current level rates started last week at. The base line for conforming 30 year fixed rates with no origination fee seems to be sitting at 5.0%. There are days you can get it below and days it is higher, but what appears to be the base is 5.0%. The comparable 5/1 ARM runs about 1% lower typically and has been following this same path with the 30 year fixed rate. Jumbo loan rates have seemed to stabilize as well with 30 year fixed holding around 6.0% and the 5/1 jumbo ARM holding about 5.25%. While there are loans that we can get lower rates, these are case by case with very specific details. Using these figures will allow you to be safe when discussing where rates are. What to expect going forward is much of the same. Volatility, although controlled, will be the name of the game. Many lenders are still trying to figure out just how much cash they need to withstand the economic conditions. While underwriting guidelines are relaxing ever so little, there is a lot more verification and validation that needs to take place. I would not expect to see loan to value guidelines relax much from current levels until sometime next year when lenders become more comfortable with values holding steady. There still is some concern over long term home values which is keeping lenders from getting aggressive in the LTV arena. Other exceptions are taking place which is a very positive trend. Look for interest rates to stabilize near these levels for the next several months. The wild card is the US Treasury will soon run out of money to keep interest rates artificially low. This means conforming rates will likely rise, and my best guess is about 0.5% over the first half next year. Jumbo loans are much harder to project as they are set by each lender and the US Treasury has little impact on these rates. The news next week that has a high impact on rates will be on Wed when the FOMC minutes are released and CPI comes out. In addition, Thursday is the Philadelphia Fed index report that is also a potential mover of rates. All in all positive signs that the recovery is taking place and rates are beginning the slow drift to long term stabilization without government intervention. As always please let me know how I can help you and your clients.
Dan Butts
Private Mortgage Banker Wells Fargo Home Mortgage D3600-026 16 Broad Street Charleston, SC 29401 (843) 937-4677 Tel (843) 343-8609 Cell (866) 619-5419 Fax danb@wellsfargo.com