Dennis' Mortgage Blog

We had a good week overall in the mortgage rates, down from last week—most dramatically on conventional (Fannie/Freddie) rates.  With some unpopular data coming out today that puts annual inflation rate, the core rate, at 2.4% year over year.  This number exceeds the Fed target of 1-2%, because of this investors react to potential higher rates—causing a bump in mortgage rates.  Overall the news did not affect us as much as I would have thought; this could be for a number of reasons, one of which is that the news came on a day when not a lot of people will be working in the investment markets today.  First plenty of them were in Denver this week, second it is the Friday of a three day weekend so those not in Denver lobbying are in the Hamptons already.  A good day for news like this break and not affect mortgage rates.  This does set up for a busy day on Tuesday however, we could see a volatile market Tuesday morning and early next week.  You know my mantra:  lock ‘em!

We have seen additional tightening in the underwriting of files the past couple of weeks.  For the past several years all lenders to the underwriting conditions provided by the automated underwriting software from Fannie Mae and Freddie Mac.  Recently more and more lenders are saying they may (read “will”) have additional conditions to those from the automated underwriting once a human underwriter reviews the files.  Because of this we are seeing an increase in approvals requiring additional documentation.  This leads to a longer underwriting period and also some added frustration as we go back to borrowers for additional documentation.  I counsel patience and anticipate a slower process than we were accustomed to for the past several years.  Sellers, and buyers, need to start become more comfortable with 45 day escrows on even the files that are seemingly the simplest.

Another phenomenon we have started to notice is the spread between individual lenders from day to day as the mortgage backed securities markets (bonds that determine our rates) fluctuate through the day.  We see a lender significantly lower than others one day, and then higher the next with another lender dropping into the low slot.  Typically most of our lenders are crowded around the same price point for the products, lately there has been a much wider spread between the high rate of the day and the low rate of the day.  As a broker we do not mind this so much as we can take advantage of utilizing the low lender for our locks; from a client perspective it does not have a significant effect but I have found it interesting and thought I would mention it.

***ALERT*** NO CHANGE FROM LAST WEEK: Jumbo 30 year fixed rate pricing is not available; the most reasonable quote we have currently from our lenders is 8.5% at cost of 3.5 points.  5/1 and 7/1 ARM pricing is available on loans over $719,000---call for quotes.

NOTE PRICING BELOW IS BASED ON 20% DOWN FOR JUMBO LOANS AND 10% DOWN FOR CONFORMING, 3% FOR FHA, FULL DOC, AND FICOS OF 740 AND ABOVE (change from last Friday):

30 year conventional at 1 point 6.1255%          ê  .250%

30 year conforming-jumbo at 1 point 6.375%            ê  .125%

30 year FHA at 1 point 6.125%                                  ê  .125%

30 year jumbo at         NO PRICE CALL FOR INFORMATION              

What an amazing week in America, with the formal nomination of Barack Obama and the selection of Sarah Palin as John McCain’s running mate we are guaranteed to have a historical election in November.  My hope as we move toward that historic day is that the focus remains on the candidates’ policy positions, ideologies and character and not on their race and gender.

Speaking of history, here is Wikipedia entry on the history of Labor Day.

Thanks to everyone for their referrals, it is the best compliment I can receive on my service, experience and products.

Have a great weekend!

Dennis