IMPORANT “JUMBO-FHA” UPDATE: We have no pricing available on this new financing vehicle from any of our wholesale sources. My best estimate is that the rate will be about 0.5% in rate above rate listed below and on my chart.
Rates are updated to include Conforming-Jumbo and FHA as both have loan limits to $729,750 in most areas of California. **We do have pricing on the Conforming Jumbo as listed below
The economic data and chatter continues to fall into either “recessionary” or “inflationary” categories leading to a very mixed market. This week the minutes from the recent Fed meeting were released and they show dissension in the ranks—two of the Federal Reserve Governors were outspoken against any rate cuts and warn the rate cuts that have already happened are feeding inflation. I agree on to the inflation part…
My perspective is the majority of the Fed realizes we are in for inflation down the road, however the immediate need to keep the markets afloat and investment banks open—I agree with this approach as well.
Keep very open communications on all transactions. Make sure programs and qualifying loan numbers are still valid when writing offers. Call me to ensure both!
Note of caution: we have 1 source currently for 2nds on 80-10-10 financing, so most clients with less than 20% down are being priced using mortgage insurance.
NOTE PRICING BELOW IS BASED ON 20% DOWN FOR JUMBO LOANS AND 10% DOWN FOR CONFORMING, FULL DOC, AND FICOS OF 720 AND ABOVE:
30 year conventional at 1 point 5.5% (flat)
30 year conforming-jumbo at 1 point 6.25% (flat)
30 year FHA at 1 point 5.5% (3 % down plus mortgage insurance premiums)
30 year jumbo at 1 point 7.25% (down .125% from last Friday)
This past week has seen an increase in buyers sniffing around in the jumbo marketplace—at least more so than in recent weeks. This is good news for the traditional home buying season that is getting ready to start!
I appreciate your referrals and look forward to working with you this week!
Please feel free to forward this email to your co-workers and clients--or send them to my Mortgage Blog where it is posted weekly.
Have a great weekend,
Dennis
Dennis C. SmithStratis FinancialDirect (562) 472-1118
Mobile (562) 243-6912
Fax (562) 684-4316
www.DennisCSmith.com : apply on-line, check rates, check loan status and much more
Do you need this? Most of my clients do but have not taken the time; please do so! I have spots available for those who wish to meet Debra Caldin, an Estate Planning Attorney in my office Wednesday May 15th in my office. Free 45 minute consultation to speak with you regarding your estate, trust, planning, etc. Call or email me for a meeting time. If you do not have a trust or estate plan you need this meeting.
VERY IMPORTANT: If a buyer wants to purchase a condominium with 5% down he/she must use FHA financing—there are no more mortgage insurance companies insuring the transactions on Fannie Mae/Freddie Mac loans. If showing condominium to buyers with little down payment make sure the complex is FHA approved, otherwise clients need minimum of 10% down (15% for jumbo non-conforming).
Interest rates and equities (the stock market) have been in a pitched battle all week with tremendous swings in both every day. As the stock prices drop we see rates drop, as they rise we see rates rise. Why? The flood of economic data this week is putting a lot of pressure on the Federal Reserve to not only leave rates alone next week but possibly raise them. With raw crude oil prices surging in global markets, food prices rising globally and shortages in many countries of basic staples such as rice, there is a lot of inflationary pressure; which prompts the Fed to raise rates.
A month ago when I was questioning the Federal Reserve in their significant lowering of rates starting in mid-January during the Martin Luther King, Jr. holiday I hypothesized that the Fed was trading inflation later in the year to make sure the credit markets and major lenders and investment houses were secure—at which point they would raise rates and begin to fight inflation. With the recent spate of economic news, combined with earnings reports showing most of the major banks and Wall Street investors, while taking it on the chin, will survive this market, the Fed is in a position to aggressively fight inflation—higher rates. One of my co-workers hypothesized that the Fed may look to push the economy over the brink and into recession so they can then go about slowly re-building the economy over the next year. With the fear in some of the economic numbers of stagflation this approach, while painful, makes sense. As an aside, stagflation is a term coined in the 1970’s under President Carter, the term describes an economy suffering from inflation and rising prices, while at the same time suffering stagnant business activity and rising unemployment. To combat this Carter tried massive tax hikes and government spending—neither of which worked yet both of which we hear on the campaign trail this year. End of aside.
What to expect in our industry? Continued daily fluctuations in the rate markets and mortgages through the spring and probably into summer. Depending on the price of raw crude oil and the action of the Fed we could see conforming rates top 6.25% heading into Memorial Day weekend; about the same as last spring.
NOTE PRICING BELOW IS BASED ON 20% DOWN FOR JUMBO LOANS AND 10% DOWN FOR CONFORMING, FULL DOC, AND FICOS OF 720 AND ABOVE (change from last Friday):
30 year conventional at 1 point 5.875% (down 0.125%)
30 year conforming-jumbo at 1 point 6.375% (down 0.25%)
30 year FHA at 1 point 5.875% (flat)
30 year jumbo at 1 point 7.625% (flat)
I am hearing of multiple showings and offers on properties in different markets in different price ranges, particularly condominiums in entry level prices.
Meet the Estate Planning Attorney! I have spots available for those who wish to meet Debra Caldin, an Estate Planning Attorney in my office Wednesday May 15th in my office. Free 45 minute consultation to speak with you regarding your estate, trust, planning, etc. Call or email me for a meeting time.
WE HAVE NEW FHA LOAN LIMIT PRICING!
Open the flood gates! We have several applications in some stage of the process and are working through them quickly, but the good news is we finally are able to price, approve and fund the new FHA loan limits! I do not have the rate on chart as it varies depending on loan amount and several other factors, but rule of thumb is to add either 2.00 points in fee or 0.500% in rate to “normal” FHA fee and rate.
The bond markets this week really got punched in the stomach, as you can see by the rates below and the chart. Much of the plethora of economic data this week was inflationary, scaring the markets feeling Fed may raise rates soon. As a result we have seen the biggest one week jump in rates in about two months. Lock, lock, lock…I have said it for twenty years and will say so for another twenty. When you have the terms and time of escrow agreed upon lock in the rate and terms on the mortgages!
Good news is that a couple of major lenders had really good response to selling their first batches of the new conforming-jumbo mortgages in the secondary markets; continued positive response to this should lead to narrowing of the rate gap with traditional conforming rates and potentially trickle up to the jumbo rates as well.
Looking forward we see continued volatility as 1st quarter reports start coming out and we see the effect of the credit crunch on the market as a whole through individual company earnings. From an activity standpoint we are speaking with a good number of first time buyers looking for condominiums and entry level single family homes. They are taking advantage of price softness and continued low rates.
30 year conventional at 1 point 6.0% (up 0.500%)
30 year conforming-jumbo at 1 point 6.625% (up 0.375%)
30 year FHA at 1 point 5.875% (up 0.375% )
30 year jumbo at 1 point 7.625% (down .375% from last Friday)
Grand Prix weekend in Long Beach is here, as they start their engines for the race track let’s start families homeownership track!
Did you know Reverse Mortgages can be used to purchase new homes for seniors? Great way to downsize, put significant assets into liquid accounts and never have another mortgage payment!
After falling precipitously early in the week the mortgage and bond markets rallied late yesterday and this morning on negative unemployment news. The unemployment rate cracked up to 5.1% nationally in March, the highest in two years. This portends lower rates in the near future and we are cautiously floating some clients today—cautious being a critical position. Note I never float a client’s loan lock without their knowledge of the ramifications and their consent—no surprises. Once I indicate a loan rate is locked it is locked for the rate, terms and period stated.
Next week some more economic numbers are available that could put further downward pressure on rates, as well we could see some major movement as most lenders tell us they will be able to provide pricing for the Jumbo-FHA loans. I hope so as I have several clients waiting to take advantage of the new program!
30 year conventional at 1 point 5.5% (down .125% from last Friday)
30 year conforming-jumbo at 1 point 6.25% (down)
30 year jumbo at 1 point 7.37% (up .125% from last Friday)
We are seeing a fair amount of activity with new buyers looking to take advantage of the lower prices with still excellent rates. Most o f the activity is occurring in the first-time buyer and conforming price ranges which will result in a continuing dip in median home sale prices. The numbers to watch for market health and stability are the month to month number of transactions not necessarily median prices.
Dennis C. Smith, California Dept. of Real Estate Broker #00966315 Stratis Financial Corporation, California Dept. of Real Estate Broker #01269597
Dennis C. Smith, California Dept. of Real Estate Broker #00966315
Stratis Financial Corporation, California Dept. of Real Estate Broker #01269597
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