Last week, markets appeared somewhat optimistic with mortgage rates remaining consistently stable despite debit ceiling issues and talks that fell apart prior to the weekend. It seems as though things may change this week as the deadline looms and an agreement has not been reached. Regardless, it is still a good time to lock in mortgage rates that are still at the lowest levels of 2011.

Freerateupdate.com'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 15th 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 2nd. 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.

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.

Published: July 27, 2011

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Edward James Ferrara III spent 8 years (2001-2008) brokering and banking home loans in Orange County, CA to the tune of some 500 million dollars in mortgages funded by May of 2008, when he founded the rate research website FreeRateUpdate.com. Ed is not only the founder of FreeRateUpdate.com, he is also a lead contributor to the site, whose roster includes over a dozen writers and of which receives over 50,000 page views per month. Ed's passion for helping consumers to avoid falling victim to banks dishing out higher rates for bigger profits has helped FreeRateUpdate.com to become a unique authority on mortgage rates. Ed recently married Cheyne Aki Gantt and became a first time father to Edward James Ferrara IV, born August 31st 2009. Ed and FreeRateUpdate.com have recently been cited in numerous media outlets including the Los Angeles Times, Yahoo Finance, and Marketwatch.