Mortgage rates fall again to record lows

Courtesy of Jeff Lazerson, of Mortgage Grader.

RATE NEWS SUMMARY: From Freddie Mac’s weekly survey and all of us loan officers thanking our lucky stars, the average 30-year fixed rate hit yet another new record low of 3.56 percent with .7 point. This is down from last week’s 3.62 percent. Last year at this time, 30-year fixed rates were almost one full point higher at 4.51 percent. The 15-year fixed rate mortgage also hit a new record low of 2.86 percent and .7 point, down from last week’s 2.89 percent. The 5-year ARM averaged 2.74 percent and .6 point. This is down from last week’s 2.79 percent.

APPLICATION NEWS SUMMARY: Mortgage Bankers Association weekly survey indicates loan application volume dropped 2.1 percent for the week. This was certainly due to the 4th of July holiday week. Refinances represent 77 percent of the transactions in contrast to 23 percent being purchase contracts. In the Pacific region of the country, the average refinance loan amount was $361,288 and the average purchase loan size was reported at $310,977 … of course highest averages in the nation.

Source: Freddie Mac; click to enlarge!

WHAT I SEE: From rate sheets hitting my desk that are not part of Freddie Mac’s survey:  Locally, 30-year conventional fixed rate mortgages are available at 3.25 percent with 1 point. WOW! The 15-year is available at 2.75 percent and zero points. FHA and VA fixed rate mortgages can be captured at 3.25 percent and zero points. FHA streamline refinance loans are readily available with no credit scores, no matter how bad the credit. So, as long as you have had one or less mortgage late payments in the past 12 months you can qualify. You can even do a cash recapture loan. That is up to 75 percent cash-out with as little as one month of seasoning when you paid cash for your home and now you want access to your money.

WHAT I THINK: Purchase contracts continue to show the appetite and willingness of buyers to offer and pay 10 percent more than recent neighborhood comparable closed sales prices. This cascading effect on values cuts both ways. Multiple distressed sales were just killing property values a few short years ago. Now, we are experiencing the rising of the tides — as long as we define this as the $600,000 or lower sales price range. Little or no inventory is driving this phenomenon, certainly not an economy on fire. Too many responsible borrowers paying on-time simply don’t have the equity to sell and move-up. Good news for upside-down borrowers who are not fortunate enough to have had their loans owned by Fannie or Freddie. HARP III should be out very soon, allowing almost all of the rest of the underwater borrowers to refinance. Hopefully, the Federal Housing Financial Agency and HUD will get tough with lenders and make them participate in all loan rescue programs as a condition of having access to government guaranteed and insured loan programs. They were recent hints in the media of a get-tough policy. We shall see!

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