Rates as of 3/10/10
7:30am post: There is moderate upward pressure on mortgage security and long term Treasury rates with Stocks up .4%. $21B of 10-year Treasury Notes will be auctioned at 10amPST. (more rate outlook analysis below) __________________________
30 day lock RATES with NO PPAY PENALTIES , NO POINTS on rates quoted unless otherwise noted. Lower rates available with points.
Fixed Rates
NO PTS ON CONFORMING 1 PT ON JUMBO
| Product |
Conforming |
Jumbo |
| 30 year |
4.875% |
5.875% |
| 15 year |
4.25% |
5.625% |
| 20 year |
4.75% |
5.875% |
SUPER CONFORMING 30yrfixed 5.125% no pts. or 4.875% with .75 pts
5/1 ARM 3.625%with no pts, 3.375% with 1 pt
Conforming above $417k to $729,750 in most counties
Adjustable Rate Mortgages (ARMs)
No pts on conforming 1 point on jumbo
| Product |
Conforming |
Jumbo |
|
monthly ARMs no neg amort. fully indexed |
n/a
|
n/a
|
| 3/1 |
3.75% |
4.625% |
| 5/1 |
3.5% |
4.75% |
| 7/1 |
3.75% |
5.125% |
| 10/1 |
4.75% |
5.5% |
(all rates subject to rate adds for less than excellent FICO scores, higher LTVs, loan amount adjustments and for Cash out)____________________
RATE OUTLOOK (cont.)
Mortgage rates came down sharply beginning in 11/08 as the Fed acted for the first time in history to directly lower mortgage rates by buying mortgage securities. On 12/17 and 3/18 rates plunged following Fed announcements of programs to buy more mortgage securities with the intent of lowering mortgage rates. We had this incredible two month period thru 5/26 of mortgage rates being very stable at historic low rates. In late May the market began to doubt the Fed's willingness and ability to keep mortgage rates so low in face of concern over huge gov't borrowing. Also the financial markets formed a consensus that the economy was near the bottom of this recession and recovery was certain by year end. Rates spiked .75% in late May and early June. But rates improved in mid 6/09 as doubts arose as to how strong the recovery would be. Mortgage rates stayed in a relatively narrow .25% range during the summer but improved in the fall to get back near the spring lows in early Oct. and in late Nov. hit new lows before moving up a bit in 12/09. Rates have moved down a bit just above the 11/09 lows, and been pretty stable so far in 2010
If you save significantly at current rates they should not be passed up. Timing the very bottom or top of any market is nearly impossible. If you do not have a good fixed rate it makes sense for almost everyone to get one at these historical low rates. When the economy improves it could be many years before we see rates this low again especially because the actions to cure the crisis will almost certainly result in an inflation problem when the economy starts to grow again. With all the uncertainty it makes sense to have your rate locked in for as long as possible.
Long term interest rates, including mortgages, are controlled by daily trading in the bond market. The bond market actions most often preceed the Fed as the market participants are able to analyze the same data that the Fed sees. The law of supply and demand say increased borrowing from the gov't bailout of the financial system (as well as the huge budget deficit) will have an upward pressure on rates at some point when the economy recovers. We can expect that long term rates will rise before the Fed starts to raise the short term rates. Additionally the Fed's $1.25 Trillion program to purchase Mortgage Backed Securities is ending in 3/10. This program, that has kept mortgage rates at least .5% lower than they would otherwise have been.
INTERMEDIATE TERM AND SHORT TERM RATES: Short term rates are driven largely by the Fed's actions. Intermediate term rates (3-7 yrs.) are in between and are more influenced by the Fed's handling of short term interest rates than the long term fixed mortgages are. Jumbo intermediate term loans are about 1% below the jumbo fixed rates because of some lenders willingness to hold the intermediate term loans in their portfolios.
The Prime Rate has been 3.25% since the 12/16/08 Fed rate cut, so prime tied HELOCs are very cheap money after having spiked to over 8% 2.75 years ago. Lender cutbacks have tightened the availability of this money significantly so it much harder to get a new HELOC and older HELOCs have had limits cut as property values drop.
The Fed cut short term interest rates by 5% from 9/07 to 12/08 when the Fed Fund rate was lowered to essentially 0%. This left the Fed using other innovative programs to further stimulate the economy. The next Fed meeting is 1/27/10. In the first half of 2010 The Fed will unwind emergency stimulus programs that provided extraordinary liquidity to financial institutions and markets. The Fed is not expected to begin raising rates until late 2010.
Annual core inflation (without energy and food) was 1.8% in both 2008 & 2009, within the Fed's target of 1.0%-2.0% Total inflation was 2.7% in '09 after being only .1% in '08. Inflation is not an immediate concern as there has been huge asset deflation in housing. The Fed & gov't moves to fight this will be inflationary in the long run. But the slowly growing economy should keep inflation controlled over the next year until the economy starts to grow at a good pace.
Borrowers with adjustable mortgages tied to Treasury & LIBOR indices and lines of credit tied to prime will continue to be helped by the low short term interest rates but beginning in 2011 will be exposed to the probability of sharply higher rates.
Call for information on additional products. Rates are subject to change. Call to confirm current rates. |