Welcome to Illinois Mortgage Rates and News week in review for the week ending July 25th, my take on the week's financial news and how it affected Illinois mortgage rates.
There was a fair amount of mortgage related news this week, and even more rumors. The economic news was again mixed, and the big question in the 
mortgage backed securities markets is which battle should we be fighting, recession or inflation. The answer changes from day to day, and mortgage rates continue to be wildly volatile. We had three days where mortgage rates went down, two where they went up and the week ended with mortgage rates getting worse, but slightly better than where we were at the end of last week.
Oil prices continued to fall. The price per barrel is down to $123, about $25 less than it was just a few weeks ago. If the trend continues, this by itself should take the edge off inflation. The economy is still weakening. Initial jobless claims came in much higher than projected and are now at recessionary levels. Existing Home Sales came in lower than expected and the sale price for an average home is down about 6.0% from where it was a year ago. These are all signs that bolster the recession argument. On the other hand, Durable Goods (big ticket items from refrigerators to airplanes) rose slightly when they were expected to drop by a lot. New home sales bucked the trend of existing homes and though sales were still down, they had the best month in ages. The inventory for unsold new homes is now around 10 months supply.
The biggest surprise might be the consumer sentiment. The Michigan index was revised from 56.4% to 61.2%. If people are feeling better about their prospects they are more likely to go out and spend money, which feeds into the fear of inflation angle. A friend at work pointed out something that I hadn't noticed before. Have you been to the grocery store lately? Have you noticed anything funny with the ice cream? The packages have gotten smaller. Instead of half-gallons they are now 1.5 quarts. This is inflation in action, maybe in a way that you don't notice at first. At least not until you realize there are fewer scoops in the carton. So again, inflation is real and it is a concern.
But let's look at that other hand again. One of the big reasons our economy was so strong for so long was because home prices were strong and with home equity loans and cash-out refinancing homeowners were tapping into their equity to pay for home improvements, and new purchases. That has disappeared completely. Not only are mortgages harder to get, but home equity loans are on the way to becoming an endangered species. If people don't have the equity to spend that means they are going to spend less. It seems to me we are in a very two-faced economy. Asset prices are moving lower and the credit crunch is still choking off growth, but prices for many items are still moving up. The consumer index was up, but I wonder if this was a one month trend or the mark of a true reversal.
The big news this week was the house passing the housing bill - and since it hasn't been completed yet the rumors are still circulating. It was getting some resistance in the Senate from some die hard Republicans in the Senate, but it is expected to be passed quickly and the President has promised to sign it. The bill props up Fannie Mae and Freddie Mac by giving them an essentially limitless line of credit, gives some help to homeowners on the brink of foreclosure, and gives a boost to the housing market in several ways. I will have a full post on the particulars shortly.
Here is what Illinois mortgage rates look like today for an A+, full doc purchase on a 30 day rate lock, with 0 points, and no origination fee. The conventional loans are based on the highest conforming loan amounts, which give the best pricing. (Again, there are many factors which affect mortgage rates and your ability to be approved for a loan. These rates may not fit your situation and this is just a sample of the programs that are out there. If you would like a quote for your personal situation, or to get pre-approved for a mortgage, give me a call or contact me and I'll take the time to find the rate and program that is best for you.) :
Conventional loans up to $417,000
30 year fixed rate 6.50% 6.634% APR
15 year fixed rate 6.00% 6.143% APR
5-1 A.R.M. 5.75% 5.867% APR
7-1 A.R.M. 5.875% 5.989% APR
For Jumbo loans over $417,000
30 year fixed rate* 6.50% 6.634% APR - SPECIAL PRICING -
Requires 25% down payment
7-1 A.R.M.* 6.00% 6.173% APR *there is a 1 year pre-payment penalty on this option.
FHA LOANS - 3% down payment
With 1 point origination fee - 60 day lock
30 year fixed rate 6.50% 7.278% APR
With no origination fee - 60 day lock
30 year fixed rate 6.75% 7.296%
FHA APR reflects 3% down payment and the effect of mortgage insurance on the loan.
These are just a few of the programs and mortgage rates available. Which option is best for you depends on your own specific goals and needs. If you have any questions or want to go over your situation in depth, let me know how I can help.
Next week will be a big week in the markets as some of the most anticipated data is released. Whether this gives a clear picture of which way we are heading, or if we continue the up and down pattern we don't know. But I can guarantee that it will be volatile.
Pete Thompson is an Illinois mortgage banker who provides superior mortgage service and competitive mortgage rates in Chicago, the Chicago area and throughout Illinois. Click here for a Free copy of The Real World Home Buyer's Guide - How to Save Thousands when Buying a Home and Getting a mortgage. For information on the latest mortgage news and current Illinois mortgage rates, please visit http://www.illinoismortgageratesandnews.com
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