Mortgage Rates: Housing Starts and Permits Gaining Strength
By: Rosemary Rugnetta | March 20th, 2013
The Commerce Department’s latest report shows that housing starts and permits are gaining strength as both increased for the month of February at the fastest rate in 4 1/2 years. Starts for homes and apartments came in at a seasonally adjusted annual rate of 917,000 which is up from 910,000 in January. Over the past 12 months, overall housing starts have risen 28%. Building Permits, a reflection of future construction, rose 4.6% to 946,000 which is the highest since June 2008. Continued growth in the housing sector is expected going into the busy spring and summer season.
According to the Weekly Mortgage Applications Survey by the Mortgage Bankers Association, refinancing applications represented 75% of all mortgage activity for the week ending March 15th. Applications for HARP loans rose to 31% of all refinancing applications. Overall mortgage application volume was down 7.1% with the Refinance Index falling 8% and the Purchase Index down 4%. 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 ARM loan rates are as low as 2.375%. Conventional mortgages require that borrowers have good credit and the necessary qualifications in order to receive low rates. A full appraisal, both interior and exterior, is also required to determine loan to value ratios. These mortgages, both purchase loans and refinances, need private mortgage insurance when the LTV is above 80%. However, HARP refinances do not require an appraisal, in most cases, since LTV caps were removed in 2011. HARP loans are for underwater mortgages that were sold to Fannie Mae and Freddie Mac prior to June 1, 2009. The HARP loan program, which is available until the end of 2013, continues to be popular since there are still many homeowners who remain underwater and eligible. However, some homeowners do have difficulty obtaining HARP approval due to lender overlays and restrictions. An easier way to obtain HARP loan information is by submitting the online form which will return a response almost immediately. This process can be used for HARP or any other mortgage program available.
Today’s FHA 30 year fixed mortgage interest rates are as low as 3.250% and FHA 15 year fixed mortgage rates are as low as 3.000%. Increasing by .250%, FHA 5/1 ARM loan rates are now as low as 2.500%. Effective April 1st, FHA guidelines are changing and will require a higher annual mortgage insurance premium. In addition, automated underwriting will require a minimum credit score of 620 and maximum debt to income ratio of 43%. Home buyers can continue to use housing grants or loans, as well as, approved gifts to bring down the cost of an FHA mortgage. While FHA closing costs (APR) are high because of the upfront mortgage insurance premium and other FHA fees, seller concessions are often used to offset these expenses. These changes will not affect the FHA streamline refinance which does not require an appraisal or any other documentation as long as there is no cash out. At this time and until the end of 2013, the FHA streamline is offering reduced upfront and annual mortgage insurance premiums for loans that were endorsed prior to June 1, 2009. However, to qualify for this incentive, eligible borrowers must have a good mortgage payment history with FHA. For more information about the FHA streamline or other FHA loan programs, the online form is available for submission and does not require the input of a social security number.
All jumbo mortgage rates have increased this week. Current jumbo 30 year fixed interest rates are as low as 3.500%, jumbo 15 year fixed mortgage rates are as low as 2.876% and jumbo 5/1 ARM loan rates are as low as 2.500%. These low rates require that borrowers have maintained a history of excellent credit. Jumbo loan guidelines tend to be strict due to the large amount of financing and the fact that most of these loans are held within the lender’s portfolio. Full documentation is required and will be verified. With the increase in jumbo mortgage lending, competition has increased and shopping around is necessary before making a final decision. The online form can be submitted for this purpose and will return a response almost instantly.
MBS prices (mortgage backed securities) are down -3/32 (FNMA 30 yr 3.0 at 102.31) which is close to earlier prices. Mortgage rates are affected by MBS prices and move in the opposite direction. Europe is once again in the news as the situation in Cyprus continues to unfold. The original proposal to tax bank accounts in order to receive a EU bailout package has been voted against which leaves Cyprus officials trying to negotiate a different plan of action.
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