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12 Dec 08 Mortgage Rates Drop to 4.5 Year Low

Mortgage interest rates dropped again this week, following the government’s efforts to assist the troubled housing market.  Government sponsored mortgage lender Freddie Mac said Thursday that fixed rates on 30-year mortgages averaged 5.47% for the week ending Dec. 11. That’s down from 5.53% last week and well below 6.11%, which is where the rate stood at this time last year.  Mortgage interest rates began to fall after November 25th, when the administration announced that it would throw another $800 billion into the financial markets to unfreeze consumer credit and mortgage lending.

Specifically, mortgage rates responded to the Federal Reserve’s announcement that it would purchase up to $500 billion in mortgage loan securities backed by Fannie Mae, Freddie Mac and Ginnie Mae. It will also buy another $100 billion in direct debt issued by those firms.  Mortgage refinancing rates dipped to 5.77% on a 30-year, fixed rate loan the day after the government’s announcement, down from the previous Monday’s 6.06% average, according to Keith Gumbinger, vice president of HSH Associates. And the downward trend has persisted.  “What we’re seeing is a slight continued decline influenced by the Federal Reserve’s announcement to buy half a trillion in mortgage backed securities,” Gumbinger said. “And this continued minor downdraft is also due to the poor economic climate.”

The thirty-year mortgage rate has not been this low since March 25th, 2004 when it averaged 5.40%.  “Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed mortgage rates room to ease back a little further,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a release on Thursday.  FHA home loan rates declined as well, so more homeowners should now be able to qualify for a refinance loan that features interest rates fixed in the 5% range.

The fifteen year fixed rate mortgage this week averaged 5.20%, which is down from 5.33% last week. A year ago at this time, a 15-year fixed rate loan averaged 5.78%.   The 15-year rate has not been this low since February 7, 2008, when it averaged 5.15%.  Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.82% this week, up from last week when it averaged 5.77%. At this time a year ago, the 5-year ARM averaged 5.89%.

According to the Mortgage Bankers Association, the one-year Treasury-indexed ARM averaged 5.09% this week, up from last week when it averaged 5.02%. Last year, the 1-year ARM averaged 5.50 percent.  “The housing market still hangs in the balance,” Nothaft said in a release. “On a year-over-year basis, after rising in both August and September, pending existing home sales fell 1.0% in October, based on figures from the National Association of Realtors. Meanwhile, conventional mortgage loan applications for home purchases over the week ending December 5th were up 2.0% from four weeks prior, but were still 51% below the same period last year.” Get informed when the interest rates change and get the most updated mortgage rate news online.

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05 Dec 08 2009 Mortgage Loan Limits

The Federal Housing Finance Agency announced the conforming loan limit will remain $417,000 for 2009 for most areas in the U.S. but specified higher limits in specific high cost cities and counties. The conforming home loan limit is the maximum size of loans that Fannie Mae and Freddie Mac can purchase in 2009.  Mortgage lenders across the country have been praying for positive news regarding the home loan limits.

According to provisions of the Housing and Economic Recovery Act of 2008, the national mortgage loan limit is set based on changes in average home prices over the previous year, but cannot decline from year to year.  FHA home loan limits for two-, three- and four-unit properties in 2009 will remain at 2008 levels as well: $533,850, $645,300 and $801,950 respectively, for houses in the continental U.S.  Read complete article > 2009 FHA Mortgage Loan Limits.

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05 Dec 08 Mortgage Rates Drop and Loan Applications Increase

Bankers’ group cites Fed’s bailout of Fannie and Freddie for plummeting rates, with refinancing leading the way.  Mortgage loan applications increased significantly last week, a mortgage bankers’ group said Wednesday, as government bailouts led to sinking interest rates that made mortgage refinancing especially more attractive.  In the weekly report, the Market Composite Index – the association’s measure of mortgage loan application volume increased 112.1% on a seasonally adjusted basis from the week earlier.   On an unadjusted basis, the index increased 51.4% from the previous week; it was down 21.9% from a year earlier, the report said.  

According to Kelly Media Group president, Jason Cardiff, “Clearly lower mortgage rates are good for starving brokers and ultimately, low interest rates will help revive the economy.  Cardiff continued, “The important thing to note is that the Fed and the mortgage lenders are making changes, something they have not been doing enough of.”

On an unadjusted basis, the index increased 51.4% from the previous week; it was down 21.9% from a year earlier, the report said. While the loan application statistics were high, “this is more a refinance story than a purchase story,” said Mike Larson, real estate and interest rate analyst at Weiss Research.  FHA home loan applications increased and that was a great sign for mortgage brokers, because they have lost a lot of business to loan modifications in recent months. Read the complete article > Mortgage Loan Application Activity Surges.

 

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