Housing reports continue to show improvement at the same time that low mortgage rates continue to remain intact. The current housing market conditions are favorable for consumers who wish to purchase and finance a home under very affordable circumstances. According to The U.S. Census Bureau and the Department of Housing and Urban Development, new home sales increased more than expectations even after decreasing in December. The National Association of Realtors reported that pending home sales of existing homes increased 2% in January which was above the forecast of 1%. Freerateupdate.com's weekly survey of wholesale and direct lenders shows that mortgage rates have remained steady which is helping the housing market to slowly recover as shown by the latest reports. The most popular mortgage for a home purchase is the 30 year fixed mortgage with rates which remain at 3.500%. The 15 year fixed mortgage with rates at 2.875% has been most popular with refinances. Some consumers, especially short term home buyers, are opting for the  5/1 adjustable rate mortgage which is at 2.250%. With good credit, these lowest mortgage rates are available with 0.7 to 1% origination. Lenders also examine employment, income and assets for a pattern of consistent behavior by borrowers. Mortgage refinances to a lower mortgage rate are now available with Harp 2.0 which offers easier guidelines and does not require an appraisal under most circumstances. This mortgage program is specifically designed for underwater borrowers.

Remaining steady for another week, FHA 30 year fixed mortgage rates are at 3.250%, FHA 15 year fixed mortgage rates are at 2.750% and FHA 5/1 adjustable mortgage rates are at 2.750%. While FHA mortgages are widely used by first time home buyers, existing FHA borrowers find there is nothing easier than refinancing with an FHA streamline refinance. FHA continues to have several mortgage programs available for borrowers who are interested in something more than basic mortgage financing. Sweat equity mortgages, energy efficient mortgages and rehab mortgages are currently the most popular purchase mortgages besides the standard FHA mortgage program. Down payment assistance from gifts and housing grants or loans are also acceptable with FHA mortgages. Various FHA fees and the upfront mortgage insurance premium increase FHA closing costs (APR), but these can be rolled into the mortgage provided the required down payment remains intact.

Increasing by .125%, jumbo 30 year fixed mortgage rates are at 4.375%. Remaining stable, jumbo 15 year fixed mortgage rates are at 3.375% and jumbo 5/1 adjustable mortgage rates are at 2.500%. Jumbo mortgages remain the riskiest of all mortgage products because they are private loans that are not government insured or sold to Fannie Mae or Freddie Mac. Lenders look closely at the accuracy of jumbo mortgage applications in order to reduce their risk. Higher down payments and additional months of reserves are usually necessary and, therefore, documentation and verification of assets is vital. The biggest obstacle to receiving a jumbo mortgage approval is the loan to value ratios which, due to current home prices, can be difficult to obtain.

No major market changes took place in the past week. MBS prices (mortgage backed securities) were mostly up, but not enough to cause a change in average mortgage rates. MBS prices affect mortgage rates which move in the opposite direction. While a deal was reached for Greece, concerns are still a factor among investors who continue to monitor the situation. In the U.S. jobless claims came in unchanged for the week ending February 18th, although the four week average is at the lowest point in four years. Consumer confidence, as reported by the Thomson Reuters/University of Michigan, increased in February and reached a one year high.  

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: February 29, 2012

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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.