Special offer

Illinois Mortgage Rates - Weekly Mortgage Market Update

By
Mortgage and Lending

Welcome to Illinois Mortgage Rates and News week in review for the week ending September 12th, my take on the week's financial news and how it affected Illinois mortgage rates.

It's beginning to seem like all the most important news happens on the weekends. At least that's the case in the financial markets lately. Last week the big Illinois mortgage rates, Chicago home mortgage rates bombshell was the government takeover of mortgage giants Fannie Mae and Freddie Mac. This takeover was something that had long been expected, but it wasn't looked at as an imminent event. After all, just a month before, the Fed and the Treasury made a joint statement that they were fully prepared to stand behind Fannie and Freddie. There has always been an implicit guarantee that the government would step in if necessary to keep the mortgage market functioning, but the guarantee made it official. Only this wasn't enough to restore confidence to the markets. Fannie and Freddie's stocks remained on death watch, and the markets remained in turmoil. So last Sunday morning the Treasury pulled the trigger and the entire mortgage landscape has now changed.

The immediate impact of the bailout was that mortgage bonds soared on Monday and mortgage rates dropped down to the levels they were at last Spring. But so far this has been a one day rally. Mortgage rates are dramatically better, but are now going back and forth in a tight pattern. The big improvement in rates was a result of mortgage bonds now being seen as much lower in risk than they were before the government stepped in. As part of the rescue agreement, the Treasury also indicated that it would be buying up mortgage backed securities. This should mean that rate will drop lower, but in order for that to happen, bond market investors will need to come into the market stronger than they have up to now. So the question is, what are they waiting for?

One thing could be is that it's a weekend again. Several big companies are in trouble. California banking giant Washington Mutual is near the end of the road and said to be in buy out talks with JP Morgan Chase. And investment house Lehman Brothers, another big player in the mortgage security market, is also on the verge of breakup. The question here is if the Treasury is going to step in and fund these transactions, too. Fannie and Freddie were too big to fail, but if the government continues to fund these buyouts, it dilutes the value of government debt and erodes the value of the dollar. Corporate welfare is a growth industry now, and it's not just the financials. GM and Ford are hoping for handouts, too. Being that most of the buyers of our bonds, both mortgage and T-bills, are foreign governments, this is a huge concern.

Illinois mortgage rates, Chicago home mortgage rates Most of the reports issued this week showed more proof of a slowing economy. Retail sales were much worse than expected (the stimulus checks have now all been spent) for the second month in a row. Jobless claims again came in high, again. And producer prices were down, a signal that inflation is coming under control. This is a function of oil prices, which are now just over $100 per barrel, their lowest price in months. All that news is bond friendly (bad news is good news for mortgage rates) and reason to expect that rates will dip lower. On the other side, the consumer sentiment index came in 10 points higher than expected, a sign that consumers, at least this month, are feeling a little more optimistic about the economy.

Mortgage rates dropped about 3/8s of a point this week and are now at the lowest point in months. Fixed rates have come down a lot. Adjustable rate mortgages and Jumbo loans haven't had the same move, yet. The mortgage bond market finished the week on a down note, with mortgage rates rising for the day, but still strongly down for the week. What this all means is that if you are in the market to buy a new home, or if you've been thinking about refinancing your mortgage, this is a great time to get a mortgage. If you need help, give me a call.

Here is what Illinois Home 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 illinois mortgage company 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 5.75% 5.849% APR

15 year fixed rate 5.50% 5.629% APR

5-1 A.R.M. 5.375% 5.476% APR

For Jumbo loans over $417,000

30 year fixed rate 6.50% 6.615% APR

7-1 A.R.M. 5.875% 6.042% APR

FHA LOANS - 3% down payment

With 1 point origination fee - 60 day lock

30 year fixed rate 5.50% 6.124% APR

With no origination fee - 60 day lock

30 year fixed rate 5.875% 6.316% APR

FHA APR reflects 3% down payment and the effect of mortgage insurance on the loan.

These are just a few of the mortgage 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 along with several important economic reports being released, there is also a Fed Open Markets Committee meeting (no one expects them to raise rates) and the continued fall out from the Fannie and Freddie bailout. I expect another volatile week.

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 a breakdown of current Illinois mortgage rates, please visit Illinois Mortgage Rates and News. 

Comments (1)

Fred Carver Real Estate Consulant
Retired BC Realtor - Victoria, BC
Accredited Real Estate Consultant

Hi Peter...Great Post on the Financial World....It's a time for the well managed companies Buy other not so well run companies and expand. Mortgage rates are like gasoline rates here, they go up fast and come down slow...and there lies the problem,....Greed, then consumer suffers, our market stumbles and our inventory jumps...and the sheep move in.

Thanks for sharing

Sep 14, 2008 03:06 PM