Mortgage Rates Continue Low Despite Upbeat Economic Data

Since most of the news coming out of Europe has been helping to keep mortgage rates low, upbeat economic data in the U.S. did not have as much of an impact as was expected on Friday. The stock market remained down until Friday, when several key reports were released and investors returned to risky assets. In the meantime, the Euro financial crisis and in particular Greece, has been the big influence with investors and ultimately keeping mortgage rates low. According to Freerateupdate.com's weekly survey of wholesale and direct lenders, mortgage rates have remained the same for another week and through another stock market rally. Current 30 year fixed mortgage rates are at 3.500%, 15 year fixed mortgage rates are at 2.875% and 5/1 adjustable mortgage rates are at 2.250%, all available with 0.7 to 1% origination fee to well qualified borrowers. According to S&P/Case-Shiller 20 city home price index for November, home prices fell 1.3% which means that there is still time to find a very affordable home. Even though mortgage refinance applications increased in every U.S. state during December, according to the Mortgage Banker's Association, there may be new refinancing options in the near future if Congress approves President Obama's recent request. At the current time, Harp 2.0 is still making its debut with easier guidelines for refinancing mortgages owned by Fannie Mae and Freddie Mac.

If the President's new refinancing options are eventually approved, there are plans that the refinancing will go through FHA. Right now, 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%. FHA mortgages draw many first time home buyers because of the low down payment requirements. Now, even higher income borrowers are using FHA since they have increased the FHA loan limit to $729,750 in higher cost areas. Continuing to promote affordable homeownership, FHA continues to accept lower credit scores which are used only to determine the amount of the down payment. Credit scores do not affect low FHA mortgage rates which are not risk based. Down payment assistance is encouraged with FHA mortgages which work well with housing grants and loans that are offered through state, county and local housing initiatives. The benefits offered with FHA mortgages far outweigh the higher FHA closing costs (APR) which are due to various FHA fees and the upfront mortgage insurance premium.

Jumbo mortgage rates have continued to remain consistent and in line with all other mortgage rates. Current jumbo 30 year fixed mortgage rates are at 4.125%, jumbo 15 year fixed mortgage rates are at 3.375% and jumbo 5/1 adjustable mortgage rates are at 2.500% which are available with 0.7 to 1% origination point to borrowers who have excellent credit. Although jumbo mortgages have stricter guidelines involving debt to income ratios, the requirements are very similar to conforming mortgages which require full documentation. Substantial assets and sufficient income are required because of the larger amount of money being financed. The integrity of the loan file is important to lenders because jumbo mortgages are considered private loans and increase their risk.

MBS prices did not fluctuate too much last week until Friday when investors turned to stocks when it was reported that the unemployment rate had dropped which was not expected. The Labor Department reported that non-farm payrolls increased 243,000. This was major news on Friday for the U.S. employment outlook which has, for the most part, been improving. Other reports showed that ISM Manufacturing for January was higher, Construction Spending for December was higher and Factory Orders increased in December. Although MBS prices fell on Friday, this did not hurt mortgage rates which remain at all time lows. Greece's debt problems are still overriding any positive economic data coming out of the U.S. since there is concern that a Greek default will affect worldwide global markets.

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% origination fee.

Written by Ed Ferrara