A disappointing jobs report for the month of August stabilized volatile mortgage rates on Friday. The Bureau of Labor Statistics reported that total non-farm payroll increased by 169,000 which was below expectations of 175,000. The unemployment rate dropped slightly to 7.3%. Prior months were also revised downward by 74,000. During August, long-term unemployed remained at approximately 4.3 million and accounted for 37.9% of those without jobs. This news boosted MBS prices which helped mortgage ratesas investors considered the possibility of the Feds delaying any plans to taper.
According to the most recent survey of wholesale and direct lenders performed by FreeRateUpdate.com, current conforming 30 year fixed mortgage rates are as low as 4.000% (APR 4.293%); 15 year fixed mortgage interest rates are as low as 2.875% (APR 3.578%) and 5/1 adjustable mortgage rates are as low as 2.375% (APR 2.732%).
In order to obtain low mortgage rates, borrowers must have good credit. Qualifications for employment, income and assets must also be satisfactory to received approval of the loan. According to the Mortgage Bankers Association, the Mortgage Credit Availability Index (MCAI) decreased 0.7% in August for the first time in four months and indicates that lending standards are tightening. This was due to a drop in lender offerings of interest only loans, as well as, loans with over 30 year terms both of which are outside of the new Qualified Mortgage requirements.
The Weekly Mortgage Applications Survey for the week ending August 30th showed an increase of 1.3% on a seasonally adjusted basis, according to the Mortgage Bankers Association. While the seasonally adjusted Purchase Index decreased 0.4%, the Refinance Index rose 2%. Refinance applications increased 1% to 61% of total activity, a sign that homeowners react quickly to refinancea mortgage even at the slightest drop in mortgage rates.
HARP refinances also increased to 38% from 35% the week before and reached the highest since the beginning of tracking in 2012. Although many borrowers have already obtained HARP loans (Home Affordable Refinance Program), the program is still available for eligible borrowers and will continue until the end of 2015.
Current FHA 30 year fixed mortgage rates are as low as 3.750% (APR 4.031%); FHA 15 year fixed rates are as low as 2.750% (APR 3.394%) and FHA 5/1 adjustable mortgage rates are as low as 2.500% (APR 2.866%). FHA recently updated its guidelines with another lifeline to consumers that allows a home purchase after bankruptcy, foreclosure, deed-in-lieu and short sale after 12 months if the credit issue was due to extenuating circumstances including a loss of employment and income that lasted at least six months.
This opens the door for many people to re-enter homeownership with the help of FHA financing. Home buyers need to be aware that FHA mortgageshave become a little more expensive in recent years due to increases in the FHA upfront and annual mortgage insurance premiums. FHA closing costs (APR) are high because of the upfront insurance and other FHA fees, however, seller concessions up to 6% can still be used to help pay these expenses. On the other hand, existing FHA mortgage holders with loans that were endorsed prior to June 1, 2009 can refinance through the FHA streamline program with no cash out until the end of 2013 and will receive reduced upfront and annual mortgage insurance premium fees for the life of the loan.
Jumbo 30 year fixed mortgage rates are as low as 4.000% (APR 4.349%), jumbo 15 year fixed rates are as low as 3.125% (APR 3.612%) and jumbo 5/1 adjustable mortgage rates are as low as 2.750% (APR 2.902%). Receiving low jumbo rates requires that borrowers have excellent credit and the qualifications for loan approval. As conventional mortgage rates have increased slightly, jumbo rates have remained remarkably stable. Since these loans are not backed by Fannie Mae or Freddie Mac, nor are they government insured, lenders have become even more competitive with their jumbo mortgage ratepricing.
MBS prices (mortgage backed securities) continue to be erratic and affect mortgage rates which move in the opposite direction. After several days of rising prices, MBS came down on Friday after the disappointing jobs report. Investors continue to speculate on when the Feds will begin to taper its bond purchases, as well as, what will transpire with the conflict in Syria.
FreeRateUpdate.com researches and reports advertised rates of active lenders within the FreeRateUpdate.com network.