Mortgage rates consistently stable despite debt ceiling issues


By Ed Ferrara

Elaine Quigley, CRS, GRI

Last week, markets appeared somewhat optimistic with mortgage rates remaining consistently stable despite debt ceiling.

Regardless, it is still a good time to lock in mortgage rates that are still at the lowest levels of 2011.'s daily survey of wholesale and direct lenders show that conforming 30-year fixed mortgage rates are at 4.250%, 15 year fixed mortgage rates are at 3.375% and 5/1 adjustable mortgage rates are at 2.625%. These low mortgage rates with 0.7 to 1% origination fee are available for borrowers who have maintained good credit and can provide the necessary documentation to receive lender approval. The Mortgage Banker's Association reported the largest increase in refinances for the week ending July 15, which is evidence that borrowers are jumping on this opportunity while it is here.

For those with less than perfect credit, low FHA mortgages rates are still very competitive with conforming mortgage rates, either at the same level or slightly higher. FHA 30-year fixed mortgage rates are at 4.250%, FHA 15-year fixed mortgage rates are at 3.750% and FHA 5/1 adjustable mortgage rates are at 3.000%. With a minimum credit score of 580, FHA will accept a down payment as low as 3.5%, which can be combined with housing grants and approved gifts. FHA mortgage loans are consumer friendly and continue to be the choice of first-time home buyers, even though FHA closing costs (APR) tend to be higher because of the upfront mortgage insurance premium and other FHA fees.

Jumbo 30-year fixed mortgage rates moved up and down by .125% and are now at 5.000%. Jumbo 15-year fixed mortgage rates are at 4.500% and jumbo 5/1 adjustable mortgage rates are at 3.625%. These low jumbo mortgage rates are available with 0.7 to 1% origination point to borrowers who have excellent credit. The jumbo mortgage market is not over saturated right now because of the higher conforming loan limit. If that limit decreases on schedule in October, this might change since many properties will again fall into the jumbo mortgage market. There is currently a bill in Congress to further extend the conforming loan limit which, if approved, will help to keep jumbo mortgage rates low.

Although investors appeared optimistic last week, MBS prices (mortgage backed securities) fluctuated slightly which had little to no affect on mortgage rates. As MBS prices move, so do mortgage rates move in the opposite direction. Better than expected housing starts for the month of June and a new Greece debt deal led investors to turn to stocks. Markets saw little reaction to the report that weekly jobless claims increased higher than expected. This week can turn out to be completely the opposite as tension sets in over the debt ceiling deadline which is August 2. With both parties so far apart on ideas and no sign of an agreement, concern is already influencing markets as MBS prices are starting to drop.

Rates continue to be historically low and homes have never been more affordable.

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