Mar. 30, 2010 (FreeRateUpdate.com) – FHA mortgage rates are now lower than those of conventional (conforming Freddie Mac FRE, Fannie Mae FNM insured) mortgages. FHA loan rates didn’t dip below conforming but rather held their ground as conforming mortgage rates spiked late last week. The increase in conforming mortgage rates was due to a decline in mortgage bond prices. Conforming rates move opposite bond prices just as do yields.
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A 30-yr fixed FHA loan at 4.75% is available today to well-qualified consumers paying a standard .07 to 1 point origination. This rate has been available all of March and is an 1/8 lower than today’s conforming 30-yr fixed rate, 4.875%.
15-yr fixed FHA mortgage rates also held steady despite the decline in bond prices. Today’s FHA 15-yr fixed rate remains at 4.5%, a 1/4 higher than today’s conforming 15-yr which is at 4.25.
The FHA 5/1 ARM is available today at 3.75, up an 1/8 from earlier in the week and the same as today’s conforming 5/1 ARM rate.
The jumbo 30 year fixed rate remains at 5.625.
Despite origination being the same, and interest rates slightly lower, FHA mortgages remain more expensive than conventional loans. An increase in MI, a premium charged at closing on FHA loans, from 1.75% of the amount financed to 2.25 will make the difference in cost even greater.
A government tax credit (IRS) of up to $8,000 is applicable toward closing costs on FHA loans and available until April 30th.
Tomorrow the government’s MBS purchase program is discontinued and experts expect the result to be a slight up tic in mortgage rates. The FED has bought 1.25 trillion dollars in mortgage-backed securities and is credited for today’s unheard of low mortgage rates.
The benchmark 10-yr treasury yield, used to forecast mortgage rates, is at 3.87%.