Rates:

30 yr conforming                 5.625

30 yr jumbo                          6.125                    7/1     5.625 (80% max)

ODVA                                      5.250

OR State Bond                     5.625

As you can see, interest rates are doing very well. I think this is the lowest we have seen for the last 30 days or so. No one seems to know where they will go from here though. Some think lower, most think higher. Again, as you have heard from me a number of times, inflation concerns are the primary driving force causing most to think rates will increase. Over the last week, the two main inflationary reports came out. CPI and PPI. Both of these were lower than expectations but both also showed that gasoline prices were lower in April. Not in our world! It seems that an adjustment due to seasonal factors was applied - it obviously flawed the reports.

We did have an announcement that Fannie Mae will no longer restrict loan-to-values (LTV's) in, as to what they determine, declining markets. Good news, but for those transactions with little down, the private mortgage insurance companies (MI) make the rules too. If you can't get MI then it doesn't really matter what Fannie Mae says. For zero down, we still have FHA with a down payment assistance program, VA and the USDA rural program. We can do 97% on conventional with our mortgage insurance company - there are a few MI companies still doing that - only on single-family homes.  Condo's are a different story. Most are requiring 10% down. When listing or selling a condo, always check the FHA list. If it's already FHA approved, our job gets a lot easier. That web site is:  https://entp.hud.gov/idapp/html/condlook.cfm

Last week I mentioned that FNMA's automated underwriting system has gone through a major revision. That's effective for June. They don't tell us what changes they are making but I anticipate that credit standards and debt-to-income ratios will be tighter.  If this is the case, it's better to get your borrowers pre-approved before the end of the month.

A final note on inflation. For those of you who watch inflation readings as I do, here's a quote from Charles Gave of GaveKal (www.gavekal.com):

"So maybe, just maybe, what we are seeing today is a change in relative prices (food and energy higher, housing lower) and not a general rise in the inflation rate."

Translation: this period of inflation may be a required, long term adjustment to higher food and energy prices. Once these prices are hit, inflation readings will stabilize. Good news for the long term but, for us consumers, higher gas and food prices will stay with us.

WHAT ARE YOUR THOUGHTS??