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  • Mortgage Applications Increase as Low Mortgage Rates Remain Steady

    Wednesday, December 14, 2011   /   by Justin Hoffmann

    Mortgage Applications Increase as Low Mortgage Rates Remain Steady

    While economic data being reported for the U.S. has been on the positive side, global markets continue to react to European financial problems. The housing and mortgage markets are showing signs of recovery as mortgage applications increased 12.8% for the week ending December 2nd. Mortgage refinance applications were up 15.3% and purchases were up 8.3%. Freerateupdate.com's survey of wholesale and direct lenders show that for the past week mortgage rates, except jumbo 30 year fixed mortgage rates, remained steady bringing in a surge of borrowers. 30 year fixed mortgage rates are at 3.750%, 15 year fixed mortgage rates are at 3.125% and 5/1 adjustable mortgage rates are at 2.500%. These low mortgage rates are available with 0.7 to 1% origination fee for borrowers who have a history of good credit. With Consumer Sentiment up in early December, it is evident that consumers are saving and spending at the same time. Right now, home prices are still down and can provide a more affordable means of housing in comparison to rent. For those who are already homeowners, refinancing an existing mortgage to lower mortgage rates can also produce an impressive monthly savings. It is important for borrowers to have stable employment and assets for reserves, both of which the lender will verify, in order to receive mortgage approval.

    FHA mortgage rates continue to be affordable for borrowers and are especially popular with first time home buyers. Current FHA 30 year fixed mortgage rates are at 3.500%, FHA 15 year fixed mortgage rates are at 3.000% and FHA 5/1 adjustable mortgage rates are at 3.000%. FHA mortgages now have a higher loan limit which is determined by the location of the property. This allows more borrowers to use FHA mortgages which are more affordable and require a lower down payment as compared to conforming and jumbo mortgages. FHA's easier credit qualifying attracts many borrowers who would otherwise not be able to make a home purchase. While FHA closing costs (APR) are higher because of the upfront mortgage insurance premium and other FHA fees, FHA has several options available to help pay these fees.

    It is still a good time to purchase a higher cost home with a jumbo mortgage since jumbo mortgage rates are still low and competitive. Existing borrowers can also save by refinancing to lower jumbo mortgage rates that are currently being offered. Borrowers who have jumbo adjustable rate mortgages should consider refinancing to a low jumbo fixed rate mortgage during this period of time. Jumbo 30 year fixed mortgage rates are at 4.125%, jumbo 15 year fixed mortgage rates are at 4.375% and jumbo 5/1 adjustable mortgage rates are at 3.250%. With excellent credit, borrowers can obtain these low jumbo mortgage rates with 0.7 to 1% origination fee. Borrowers will also need steady employment that can be verified and enough documented assets to cover the required reserves which can be six months or more.

    U.S. economic data has been somewhat more positive, although the Euro zone news continues to keep investors worried. This has helped keep mortgage rates low by keeping MBS prices (mortgage backed securities), which move mortgage rates in the opposite direction, somewhat level. Jobless claims were down more than anticipated for the week ending December 3rd. There was little data released last week leaving investors to rely on news from Europe. By Friday, anticipation turned to optimism for the European summit that was taking place which caused a stock market rally. This came to an end this week when Moody's Investor Service gave a warning on European countries which ended any investor confidence that came out of the summit. Several key data reports will be released this week which may cause some market reactions, although stress over Euro troubles may end up keeping things 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 a standard .07 to 1% point origination fee.

    by Ed Ferrara

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