mtg rate update, FHA mortgage insurance changes

Another roller coaster week for rates - still quite low and it's a great time to take advantage of them - rates are adjusted based on a variety of factors such:  Loan to value, credit score, type of transaction (refinance, cash out refinance, streamline refinance, etc).  I usually get updates during the day to keep me informed as to a direction the rates might be headed. 

Be aware that FHA is changing how they structure mortgage insurance - this will be in effect in early October.  It might be a good idea to get an FHA case number before then if at all possible.  Details are down below. 

Please contact me when I can be of assistance to you or your clients.  Thanks!

From Freddie Mac

McLean, VA - Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), and again, the fixed-rate mortgages reaching, along with the 5-year adjustable rate, set record lows for this survey. (The 30-year fixed-rate survey began in 1971, the 15-year began in 1991, and the 5-year adjustable in 2005.)

News Facts

•·         30-year fixed-rate mortgage (FRM) averaged 4.44 percent for the week ending August 12, 2010, down from last week when it averaged 4.49 percent. Last year at this time, the 30-year FRM averaged 5.29 percent.

•·         15-year FRM this week averaged a record low of 3.92 percent down from last week when it averaged 3.95 percent. A year ago at this time, the 15-year FRM averaged 4.68 percent.

•·         5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.56 percent this week, down from last week when it averaged 3.63 percent. A year ago, the 5-year ARM averaged 4.75 percent.

•·         1-year Treasury-indexed ARM averaged 3.53 percent this week down from last week when it averaged 3.55 percent. At this time last year, the 1-year ARM averaged 4.72 percent.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

• "Interest rates for fixed mortgages and 5-year hybrid ARMs again broke record lows this week following reports of a sluggish job market. Private payrolls increased by 71,000 jobs in July, below the market consensus forecast, and revisions shaved June's growth by 34,000 workers. The Federal Reserve also noted in its August 10th policy statement that the pace of recovery in output and employment slowed since its last meeting in June.

•·         "Low rates are helping to heal many battered local housing markets by increasing home-purchase activity. The National Association of Realtors® reported that 65 percent of the 155 metropolitan areas they track experienced yearly increases in the second quarter of this year. This compares to 60 percent of areas in the first quarter and only 44 percent in the fourth quarter of 2009."

From Think Big Work Small

Mortgage markets took a real hit yesterday on uncertainty over what politicians are doing to help underwater mortgagors. The government is adding another plan to lend money to those that are underwater but still are current. Treasury markets had become technically overbought after the sizeable decline in rates over the previous few days; yesterday the 10 yr rate increased 6 basis points on profit-taking as traders worked on overbought momentum oscillators. This morning the bond market started better with weaker equity market outlook, mortgage prices a little better but still look vulnerable in the short run but the longer look remains positive for mortgage rates.

At 8:30 two data points; July retail sales were up 0.4% about in line with estimates, ex auto sales up 0.2%; May retail sales originally reported -0.5% was revised to -0.3%. July consumer price index hit at +0.3% overall slightly higher than 0.2% estimates; the core (ex food and energy) was right on, +0.1%. Yr/yr overall consumer prices up 1.2%, ex food and energy +0.9%; both ratifying that inflation is not a factor to be concerned with. There was little reaction to the two reports in either stock indexes or the bond markets.

At 9:00 this morning the DJIA index was -3, the 10 yr note +9/32 at 2.71% -4 bp while mortgage prices were up 5/32 (.15 bp). At 9:30 the DJIA opened -20, the 10 yr +7/32 at 2.72% -3 bp and mortgage prices +4/32 (.12 bp).

The U. of Michigan/Reuters consumer sentiment index at 9:55, expected at 69.0 frm 67.8, came in at 69.6. The 12 month outlook index at 69 frm 66. A little better but the index is at its lowest readings in a year. A little bounce on the initial reaction in the equity markets and mortgage prices slipped slightly.

At 10:00 June business inventories, expected to be +0.2%, were up 0.3%; sales were down 0.6% increasing the inventory to sales ratio to 1.26 months from 1.25 month. No noticeable reaction to the report.

Rate markets are holding but with not much improvement from the selling yesterday. The mortgage markets were very soft yesterday and so far this morning don't show much strength. The reminder of the day the bond and mortgage markets will react to any significant advances in equity markets. The DJIA is trying to improves, hovering back and forth around unchanged.