Mortgage application activity continues to be boosted by low mortgage rates that remain stable and still within historic levels. The Mortgage Bankers Association’s Market Composite Index, a measure of total mortgage volume, rose 7% on a seasonally adjusted and unadjusted basis for the week ending May 3rd.
The Purchase Index increased 2% on a seasonally adjusted basis and reached the highest level since May 2010. Refinance activity surged with the Refinance Index rising 8% to a level not seen since January. Refinance applications for conventional mortgages were up 8.8% and government refinances were up 5.7%. Total refinance applications represented 76% of all mortgage application volume.
According to the most recent survey of wholesale and direct lenders performed by FreeRateUpdate.com, current conforming 30 year fixed mortgage rates are as low as 3.250%, 15 year fixed mortgage interest rates are as low as 2.375% and 5/1 adjustable mortgage rates are as low as 2.250%. Low rates are available for borrowers who have maintained a history of good credit. Traffic for conventional loans has increased since FHA mortgage changes became effective in April.
These loans require full documentation from the borrower and an appraisal for both home purchase loans and traditional refinances. Many homeowners are still eligible for HARP refinances which require reduced documentation and no appraisal in most cases.
HARP loans, which are for underwater borrowers who have loans that were sold to Fannie Mae and Freddie Mac prior to June 1, 2009, do not have loan to value limits. This program has been a lifesaver for many homeowners who have used it to move to lower rates or shorter term loans. Availability of the HARP refinance program has been extended to the end of 2015 in order to give eligible homeowners more time to move to a better mortgage.
FHA 30 year fixed mortgage interest rates are as low as 3.000%, FHA 15 year fixed rates are as low as 3.000%. FHA 5/1 adjustable mortgage rates are as low as 2.750%. Even though FHA has updated some of its guidelines, home buyers are still able to utilize the low down payment requirement and other FHA benefits that are offered. When using housing grants or loans, the overall costs of obtaining an FHA mortgage are greatly reduced.
Even though FHA closing costs (APR) are high, due to the upfront mortgage insurance premium and other FHA fees, borrowers often reduce these expenses by using seller concessions up to 6%. One of the most often used FHA benefits is the FHA streamline refinance which allows homeowners to move to a better mortgage without the need of an appraisal or other documentation provided there is no equity taken as cash. The streamline is also available until the end of 2013 with reduced upfront and annual insurance premiums for loans that were endorsed prior to June 1, 2009.
Current jumbo 30 year fixed interest rates are as low as 3.500%, jumbo 15 year fixed mortgage rates are as low as 2.500% and jumbo 5/1 adjustable mortgage rates are as low as 2.375%. Jumbo loans require that borrowers have excellent credit in order to receive low rates.
Most guidelines call for full documentation, including proof of substantial assets to cover the large down payment and additional months of reserves. Since lender requirements differ and rates can be competitive, borrowers who need jumbo loans should shop around for a deal that will satisfy their needs.
MBS prices (mortgage backed securities) move according to market conditions which then moves mortgage rates in the opposite direction. This past week, little economic data was released. According to the Labor Department, for the week ending May 3rd, weekly jobless claims fell to 323,000 which was below expectations and at the lowest level since January 2009.
by Ed Ferrara