Last week, the Federal Reserve decided that it was not yet time to taper QE3 and their monthly asset purchasing agenda. This came as a surprise since most economists were predicting that tapering would begin. As a result of the Federal Reserve's Decision, mortgage interest ratescame down giving consumers another shot at locking in a low rate. Since May, the mortgage industry has been faced with fluctuating rates based on the speculation that the Feds would begin 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 3.875% (APR 4.042%); 15 year fixed mortgage interest rates are as low as 2.750% (APR 3.327%) and 5/1 adjustable mortgage rates are as low as 2.375% (APR 2.636%). Borrowers must have a record of good credit in order to obtain low rates. Home purchases remain strong as reported by the National Association of Realtors in the latest existing homes sales which rose 6.5% in July.
The Mortgage Bankers Association reported that mortgage applications bounced back and were up 11.2% for the week ending September 13th. The Purchase Index rose 3% on a seasonally adjusted basis and 12% on an unadjusted basis. There was a surge of refinance applications which drove the Refinance Index to rise 18%. Refinance applications represented 61% of all mortgage applications, an increase of 4% from the previous week. HARPloan activity was up to 40% from 38% the previous week. HARP refinance applications continue to be a strong representation of refinances and reached the highest since MBA began tracking in early 2012.
Current FHA 30 year fixed mortgage rates are as low as 3.750% (APR 4.232%); FHA 15 year fixed rates are as low as 2.750% (APR 3.479%) and FHA 5/1 adjustable mortgage rates are as low as 2.500% (APR 2.892%). According to the Federal Reserve, FHA mortgagesand VA loans accounted for more than 45% of the financing used to purchase homes during the year 2012. While FHA closing costs (APR) are high because of the upfront mortgage insurance premium and various FHA fees, home buyers are still attracted to FHA because it allows them to have a smaller down payment. FHA also offers existing homeowners the streamline refinance which does not require a credit check or an appraisal. There remains a few months left to use the FHA streamline with reduced upfront and annual mortgage fees which is a special offer than ends December 31, 2013.
Jumbo 30 year fixed mortgage rates are as low as 3.750% (APR 4.232%), jumbo 15 year fixed rates are as low as 2.875% (APR 3.938%) and jumbo 5/1 adjustable mortgage rates are as low as 2.375% (APR 2.587%). Excellent credit is required in order to receive low jumbo rates that lenders offer. Business for jumbo loanshas increased as jumbo rates continue to be very affordable. In fact, these rates have been the same or even slightly less than conventional loan rates in recent weeks. This gives high end home buyers an opportunity to get in while affordability remains high.
MBS prices (mortgage backed securities) fluctuate daily and move mortgage rates in the opposite direction. Last week's unpredicted Federal Reserve decision not to taper their bond purchases sent MBS skyrocketing which helped bring down mortgage rates. CPI for August increased 0.1%, but was below expectations. Core PPI also increased 0.1% from July. Housing Starts for August increased 1%, but were also below predictions and due to a decline in multi-family units.
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