Freddie Mac PMMS

What’s Ahead for Mortgage Rates This Week: July 6th

Mortgage markets improved last week as economic data revealed a slowing U.S. economy.

Major stock indices fell to 2010 lows in response to a weak jobs report among other data points, forcing worldwide investors into the relative safety of U.S. government-backed bonds.  This category includes mortgage-backed bonds and the extra demand helped to drop rates.

Once again, mortgage rates improved in Indiana and Freddie Mac is reporting new all-time lows on three popular, conforming loan products:

• The 30-year fixed rate mortgage
• The 15-year fixed rate mortgage
• The 5-year adjustable rate mortgage

Low rates mean low payments and you can’t know your options until you ask.

This week, mortgage rates may move slowly. There’s very little data set for release because markets were closed Monday in observance of Independence Day, and because the second calendar week of a month is traditionally data-slow.

Tuesday, a consumer confidence study is published; Thursday, jobless claims plus consumer credit levels hit; and, Friday, we’ll see wholesale inventories.  That’s about it.  None of these reports are particularly important but, in aggregate, the numbers can show whether the economy is expanding or contracting.

In general, evidence of an expanding economy should cause mortgage rates to rise.  In a contracting economy, rates are likely to fall.

Actual mortgage rates will vary by borrower, based on property type, credit score, and home equity. If you haven’t talked to your loan officer about a refinance into today’s rates, it’s likely worth the time for a phone call.

Once mortgage rates start to reverse higher, they’re expected to reverse quickly. You’ll want to act before that move occurs.

Freddie Mac PMMS

Have You Considered an Adjustable Rate Mortgage Lately?

Each week, government-led Freddie Mac publishes a weekly mortgage rate survey based on data from 125 banks across the country.  According to this week’s results, the relative rate of a 5-year ARM is extremely low versus its 30-year fixed-rate cousin.

Consider this comparison:

• In April 2009, the two products ran neck-and-neck with respect to rates
• In April 2010, the two products are split by 0.99 percent

On a $200,000 home loan, that’s a difference of $117 per month to a mortgage payment.

Adjustable-rate mortgages aren’t suitable for everyone, but they can be a terrific fit given your individual circumstance.  For example, any one of the following scenarios could warrant a 5-year ARM:

1. Buying a home with an intent to sell within 5 years
2. Currently financed with a 30-year fixed mortgage with plans to sell within 5 years
3. Interested in low payments and comfortable with longer-term interest rate and payment uncertainty

Additionally, homeowners with existing ARMs may want to refinance into a brand-new ARM, if only to extend the initial change date on the current note.

Before opting for an ARM or a fixed rate mortgage, speak with your mortgage planner about how adjustable-rate mortgages work, and what longer-term risks may exist.  The savings may be tempting, but there’s more to consider than just the payment.

Contact James K Barath in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

Freddie Mac PMMS

Mortgage Rate Shoppers Beware: Don’t Believe the Hype

You can’t get your mortgage rates from the newspaper. Last week proved it.  Again.

Friday morning, headlines and around the country read that mortgage rates were down 0.04 percent, on average, since the week prior.

A sampling of said headlines includes:

• US Mortgage Rates Drop For 2nd Straight Week (Reuters)
• Mortgage Rates On 30-year US Loans Fall To 4.93% (Business Week)
• 30-Year Fixed Mortgage Rate Falls Farther Below 5% (Marketwatch)

The story behind the headline was sourced from the Freddie Mac Primary Mortgage Market Survey, an industry-wide mortgage rate poll of more than 100 lenders.  The PMMS has reported mortgage rate data to markets since 1971 and is the largest of its kind.

Unfortunately, rate shoppers in Northwest Indiana can’t rely on it.

See, unlike governments and private-sector firms, when consumers are in need mortgage rate information, they need the information delivered in real-time; for making decisions on-the-spot.  Consumers in Chesterton, Crown Point, Highland, Munster, Portage, Saint John, Schererville and Valparaiso need to know what rates are doing right now.

The Freddie Mac survey can’t offer that in Northwest Indiana.

According to Freddie Mac, the survey’s methodology is to collect mortgage rates from lenders between Monday and Wednesday and to publish that data Thursday morning.  The survey results are an average of all reported mortgage rates. The problem is that mortgage rates change all day, every day.  The PMMS results are skewed, therefore, by methodology.

And, meanwhile, the issue was compounded last week because mortgage rates shot higher Wednesday afternoon — after the survey had “closed”.  The market deterioration ran into Thursday, too — again, unable to be captured by Freddie Mac’s PMMS.

Although the newspapers reported mortgage rates down last week, they weren’t.  Conforming mortgage rates were higher by at least 1/8 percent, or roughly $11 per $100,000 borrowed per month.  In some cases, rates were up by even more.

Newspapers and websites can give a lot of good information, but pricing is far too fluid to rely on a reporter. When you need to know what mortgage rates are doing in real-time, make sure you’re talking to a Certified Mortgage Planning Specialist.  Otherwise, you may just be getting yesterday’s news.

Contact James K Barath in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

Freddie Mac PMMS

By The Time You Read About Low Mortgage Rates, It Was Already Too Late To Get Them

Thursday morning, homeowners in different parts of the country awoke to find similar-sounding newspaper headlines:

* Rates on 30-year mortgages sink to 4.78%, a new low (LA Times)
* Mortgage rates at record low for 2nd week (Miami Herald)
* Mortgages hit another record low (San Francisco)

The underlying story was that Freddie Mac’s weekly Primary Mortgage Market Survey showed the lowest, average 30-year fixed rate mortgage in its 38-year, rate-tracking history.

Once again, however, the headlines came too late for homeowners.

Prior to Thursday’s market open, mortgage markets had already worsened from their record-setting levels. Slowly at first, and then with momentum. The shift pressured rates higher so that when lenders issued their Thursday morning rate sheets, most showed an 1/8 increase from Wednesday’s close.

The negative momentum carried into the afternoon, too, forcing a second increase of an 1/8 percent.

The Freddie Mac survey may have been accurate when the sun came up Thursday, but by the time the sun went down, it wasn’t even close. It’s why you can’t do your rate shopping by watching newspaper headlines. Mortgage markets are volatile and rates often change without notice.

Thursday, they did it twice.

Freddie Mac PMMS

Could Mortgage Rates Have Already Bottomed Out

After improving through 11 straight weeks, mortgage rates finally ticked higher last week. This, according to Freddie Mac’s weekly mortgage rate survey. The Freddie Mac survey showed that mandatory mortgage fees rose last week, too.

Unfortunately, the bad news for rate shoppers doesn’t stop there.

Because Freddie Mac’s rate survey is conducted on Tuesday but its reports aren’t released until Thursday, the published data doesn’t even account for the previous 48 hours of activity in which rates and fees have risen further.

Versus last week, 30-year fixed, conforming mortgage rates are up 0.16% on average nationwide. On a $200,000 home loan, this equates to a roughly $20 extra per month, or $7,055 over the life of a 30-year loan.

The Era of Low Rates may not be over, but it may be time to get off the fence.

(Image courtesy: Freddie Mac)