Mortgage rates moved to three month highs this last week with the average 30 year conforming rate moving to 4.625% (4.712% APR for $250K mortgage with 740+ credit score). The big news this last week was the Federal Reserve trimming its monthly asset purchases by $10 billion/month. The reduction of asset purchases is perceived as raising mortgage rates. It seems that the Fed was prone to move forward with tapering as the issuance of new MBS and Treasury securities is in the offing. For the Fed to keep purchasing the same amount of bonds mean that they would be taking an ever increasing proportion of these assets onto its books. Long rates (30 year fixed) have moved higher by 50 basis points since putting in an intermediate low in late October. Rates have been rising at a glacial pace since May albeit with the typical “fits and starts” that are symptomatic of rate markets. Rates have, indeed, moved higher and the rising rate trend is definitely not the rate shopper’s friend. More color on the Fed decision HERE. For a dummied translation of the December Fed release look HERE.
THE GRINCHY GUARATEED FEE INCREASE
The FHFA, the regulator and conservator of FNMA & Freddie Mac, recently announced that all new loans will carry a permanent 10 basis point increase in the RATE (on average) on all new loans. This and other Loan Level Price Adjustments have been added to the costs of mortgage borrowing. The changes are set to go into effect for loans sold to the agencies beginning in April 2014. Many lenders will be adjusting their rates sheets accordingly. This translates to one thing, higher mortgage rates and mortgage costs for the consumer. The level of impact has much to do with the borrower’s credit score and Loan-To-Value (LTV). For a full explanation of the impact please refer to the following articles.
As it is wont to do, the sands of the mortgage market shift again. This bit of news just came across my desk. Perhaps a little Christmas gift for the mortgage market? If the fee delay is, indeed, implemented it would be welcome news for those in the real estate industry too!
I bid you all Happy Holidays and a Happy New Year!
If you would like to contact Gil about questions about mortgages, you can call him at 312-961-4510 or email him at firstname.lastname@example.org for a FREE consultation. To find out more about him and the people he works with, please go to www.gilvalentine.com Gil is a licensed Loan Officer, NMLS#1019717
Midwest Lending Corporation 1732 West Hubbard #2A Chicago IL 60622. Illinois Mortgage Licensee#MB6759631 NMLS#204212 Equal Housing Lender