Dennis' Mortgage Blog

Good week for bonds and rates, mild news on the inflation front, some poor earnings by Google and other brand names (yes Google has become a brand name) causing dump in stocks and voila a dip in rates the last few days.  Bond prices are bumping up against 25 day resistance levels keeping them from taking a bit more of a drop, but if they manage to break through that level by the end of trading or early Monday we may (may!) see a trend down for a bit.  In the meantime enjoy a week with a dip!
 
In looking at a year to year chart this year's mortgage rates are following the same pattern as 2006, if this is the case then we are about at the high for the year and would dip until we hit the low in the first week of December--not sure we will contiue to follow 2006's rise and fall but so far we have been pretty close.  Of interest is that it was about this time last year, when 30 year rates were peaking, that lenders began a price war for interim ARM products (3/1; 5/1, 10/1, etc.) and they dropped significantly for several weeks creating a huge spread between the interim ARM rates and the 30 year fixed rates.  So far this summer all we have heard from lenders is the changes they are making to guidelines, most significantly to high CLTV (combined loan to value: the total amount of loans on a property divided by value--essentially high CLTV is considered over 90% at this point) programs.  For those with less than 10% equity (or downpayment) guidelines are getting tighter than my waistband after a barbecue.  While I can go buy some new pants (or go on a diet and exercise) borrowers looking for mortgages with little equity have fewer options and in some cases may need to wait.
 
Fannie and Freddie are getting into the stricter guidelines and as they go most jumbo products follow.  Among the changes we have seen and/or expect to see:
 
* For interest only financing qualify at the fully amortized rate
* For Interim ARM financing qualify at the higher of the fully indexed rate or the start rate--also fully amortized
* For less than 10% equity FICOs scores edging up depending on program to 680, 700 or even 720 in some cases
 
For the "old timers" out there we are back to the programs and guidelines we had pre-1995 in many ways.  Remember buy-downs?  We are using them again.  Be careful too many lenders will be saying they can provide financing to get loans in the door and then find a way to close them.  Be confident in the lender and the experience of anyone prequalifying clients and taking applications.  There will be a lot of misinformation in the market, most of it skewed to attracting applications--we know there is a big difference between taking an application and closing an escrow.
 
Conforming down from last week, jumbo has no change from last week:

 

30 Yr. Fixed Conforming with 10% or more down: 6.375% at 1.00 point
30 Yr. Fixed Jumbo with 10% or more down: 6.625% at 1.00 point
 
Note these are for 30 day locks, purchase transactions with 10% or more down and strong FICO's. 
 
 
 
For those of you in Southern California the Orange County Fair is in full swing, the "scouts" (Blaire and Jenna) went out yesterday with Leslie and the word is "great new rides and purple cotton candy!"  I can barely contain my excitement until we go on Sunday!
 
Have a great weekend.
 
Let me know how I can assist you and your clients.   Be sure to send them to www.DennisCSmith.com for rates, to apply for mortgages, and a lot of great information on loans and mortgages.
 
 
Dennis
 Friday, July 20, 2007
 
Posted by Dennis C. Smith on July 20th, 2007 12:24 PMPost a Comment (0)
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