INTEREST RATES FOR AUGUST 7th, 2009
MBS prices opened about the same as yesterday's close. Employment data released at 8:30 EST sparked a stock market rally which took investors (and their money) away from fixed income (treasury and MBS) bonds. Employment numbers showed fewer job losses and beat forecasts. So, with the jobs picture (less bad) than expected, the DOW is already up 145 points this morning. That's it for economic data today, but MBS prices may bounce around a little as investors try to decide the best place to put their money. Mortgages loose today as rates are generally about 0.125 worse in rate than yesterday. There is a potential for rates to worsen even further during the day.
It does look like things may be looking up for our economy. IF the changes to Fed policy during this Obama administration have in fact improved housing starts, housing sales, and (if this trend in) empoyment numbers has seen a reversal, what's next? Most analysts agree that interest rates on mortgages will increase. That means ARM indicies will increase, and the Fed may consider increasing the overnight lending rate, which historically triggers immediate increases in prime lending rates among banks.
I have been promoting fixed rate mortgage product as the first choice for the last year. I am keeping an eye on the 5/1 ARM, and if property values start to increase in Arizona (in all markets) and the spread between ARM rates and fixed rates stays at 1%, I may change my bias to the 5/1 ARM.
August 7th, 2009 Interest Rates at CNN Mortgage
Conforming Conventional 30Yr Fixed 5.625%
Conforming Conventional 15Yr Fixed 5.000%
Conforming Conventional 5/1 IO ARM 4.625%
FHA 30Yr Fixed 5.500%
Jumbo Conventional 5/1 ARM 5.625%
* Above Conventional rate quotes are as of 08/07/09 on a Conventional $165,000 loan amount, primary residence at 80% loan to value, with a 720 FICO score. Fees are $1,200 in lender fees and 980 in title charges (title charges may vary). FHA Quote assumes a $125,000 loan amount and a 680 FICO score, and a 96.5% LTV. Jumbo quote assumes a 720 FICO, 75% LTV. Documentation of income and assets required. No origination or discount points.