With the revised second quarter GDP increase, hints at tapering continue to be a big influence on investor decisions. GDP (Gross Domestic Product) was revised from 1.7% to 2.5% which ended up higher than expectations of 2.2%. This increase, although unexpected, was due to a rise in the updated export data. While these numbers show a strengthening economy, increasing speculation of the Fed’s tapering of QE3 will continue to have an impact on markets, including stocks, bonds and mortgage rates.
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 4.179%); 15 year fixed mortgage interest rates are as low as 2.875% (APR 3.276%) and 5/1 adjustable mortgage rates are as low as 2.375% (APR 2.602%). Low mortgage rates require that borrowers have good credit and qualifications in order to be approved. As rates has moved slightly higher, home purchases have been on the increase for most of the summer months.
According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending August 23rd, the Purchase Index rose 2% on a seasonally adjusted basis and 0.3% on an unadjusted basis, which was 6% higher than at the same time last year. On the other hand, borrowers have been holding back on refinancing and refi applications have suffered as rates have moved up. The Refinance Index dropped 5% and now represents 60% of total mortgage application activity. However, there was increased activity for HARP refinance applications which rose to 35% from the previous week’s 34%. HARP loansfor underwater mortgages will continue to be available until the end of 2015.
FHA 30 year fixed mortgage rates are as low as 3.875% (APR 4.150%); FHA 15 year fixed rates are as low as 3.250% (APR 3.599%) and FHA 5/1 adjustable mortgage rates are as low as 2.375% (APR 2.807%). According to the latest FHA Loan Production Report, FHA single family loan applications dropped by approximately 49% during June and is a result of changes to FHA’s guidelines regarding mortgage insurance. On April 1st, the annual mortgage insurance premium was increased and on June 3 a new policy was implemented which makes it necessary to pay FHA mortgage insurance for the life of the FHA loan.
Both have had an impact of FHA mortgage volume. In addition, FHA closing costs (APR) are high because of the upfront mortgage insurance premium and other FHA fees that are charged to the borrower. Still in effect until the end of 2013, the FHA streamline refinance with reduced mortgage insurance fees remains an outstanding offer for existing FHA mortgage holders.
Jumbo 30 year fixed mortgage rates are as low as 4.100% (APR 4.392%), jumbo 15 year fixed rates are as low as 3.125% (APR 3.687%) and jumbo 5/1 adjustable mortgage rates are as low as 2.750% (APR 2.974%). With a history of excellent credit and the necessary qualifications, borrowers can still obtain low jumbo rates. Throughout the housing recovery, jumbo rates have been an exceptional value to high end borrowers. Lender competition for jumbo mortgage business continues to make it necessary for these borrowers to shop around.
MBS prices (mortgage backed securities) have an affect on mortgage rates which move in the opposite direction. It continues to be a roller coast ride for borrowing rates as daily data and the speculation of Fed pulling back its’ bond buying continues to drive investors. Last week’s news of a potential move into Syria also had an impact on markets. The end of August employment data, due out this week, is sure to drive markets and mortgage rates, both before and after its release.
FreeRateUpdate.com researches and reports advertised rates of active lenders within the FreeRateUpdate.com network.
