As the financial crisis hit a high in Europe last week, here in the U.S. mortgage rates headed lower making another all time record. The potential of a Greek default held everyone's attention even as some positive data was being released for the U.S. economy. By Friday, the results of this turmoil caused low mortgage rates to decrease even further. Freerateupdate.com's survey of wholesale and direct lenders show that some mortgage rates declined from .125% to .500% bringing most of them once again to historical lows.

With all conforming mortgage rates decreasing by .125%, current 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 are the lowest mortgage rates available to well qualified borrowers with 0.7 to 1% origination fee. These low mortgage rate levels are the best for borrowers who are looking at fixed mortgage rates that remain the same for the life of the loan. Every monthly mortgage payment, whether for 15 years or 30 years, remains the same. When mortgage rates hit these low prices, refinancing to a shorter term often results in an affordable monthly payment for a much shorter period of time.

FHA fixed mortgage rates are now lower than conforming mortgage rates. Decreasing by .250%, FHA 30 year fixed mortgage rates are at 3.500%. FHA 15 year fixed mortgage rates decreased by .500% and are at 3.000%. FHA 5/1 adjustable mortgage rates increased by .250% and are at 3.000%. Lower FHA fixed mortgage rates are great news for first time home buyers who often turn to FHA mortgages.

FHA mortgages are known to offer different home ownership programs along with easier credit qualifying. Down payment requirements are as low as 3.5% with a credit score of 580 and 10% with a credit score down to 500. These low FHA mortgage rates are not affected by credit scores as with other types of mortgages. Although FHA closing costs (APR) are higher because of various FHA fees and the upfront mortgage insurance premium, but FHA allows gifts from family, friends and employers to help with these costs. Other allowable assistance can come from housing grants and seller concessions up to 3%. FHA mortgages offer many options to borrowers which is what makes them so popular.

Jumbo mortgage rates are still low which is helping borrowers of higher cost homes that require financing are above the conforming loan limit. Current jumbo 30 year fixed mortgage rates decreased last week .125% and are at 4.500%. Jumbo 15 year fixed mortgage rates are at 4.375% and jumbo 5/1 adjustable mortgage rates are at 3.250%, both remaining the same. Most lenders require excellent credit to receive these low jumbo mortgage rates with 0.7 to 1% origination fee. It is also necessary for borrowers to have sufficient funds for a down payment equal to 25% to 30%. Assets for reserves from 6 to 12 months are normally required. Although guidelines may be stricter for jumbo mortgages, most borrowers are well prepared prior to application.

After a stock market sell off earlier last week, investors turned around mid-week when positive news for the U.S. economy was released. This caused MBS prices to drop and put mortgage rates at risk for a short time. The Commerce Department reported that construction spending was up slightly in September. The Mortgage Bankers Association reported that purchase applications were up slightly for the week ending October 28th which was positive news for the housing industry.

The Labor Department reported that jobless claims dropped for the week ending October 29th. October also saw 80,000 jobs added and a drop in the unemployment rate. MBS prices (mortgage backed securities), which move mortgage rates in the opposite direction, fluctuated throughout the week which resulted in lower mortgage rates by Friday when investors became concerned about the G20 meeting taking place in Europe. This week has started off slow with all eyes once again on the Euro zone as the Greek Prime Minister plans to step down and the Italian Prime Minister fights to stay in power.

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: November 9, 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.