Wild Week for Mortgage Rates
It has been the most volatile couple of weeks for mortgage rates in quite sometime. Stronger than expected global and domestic economic data (including manufacturing, home sales, and consumer confidence) pushed mortgage rates higher last week due to inflationary concerns. Then, last Friday’s weaker than expected Employment report helped mortgage rates recover much of the losses and rates improved. The rebound continued until the President and Republican leaders reached a deal on a new tax package on Tuesday. Although this deal was positive for the stock market, it is expected to boost economic growth and increase the budget deficit, both of which are negative for the bond market and mortgage rates. The result was the largest one-day gain in rates this year on Tuesday. The rise continued on Wednesday but, fortunately, rates have settled back down a bit the second half of this week. The volatility has been amplified with the uncertainty over what will happen with the Fed’s quantitative easing program. Fed officials have stated that they would consider ending the program early if the economy begins to grow faster than expected. If this were to happen, mortgage rates would likely move higher. We finish up the week with the Conforming 30 year rate up to 4.625%, the highest level since June.
Employment Report Falls Short
November’s Employment data removed much of the optimism about economic growth and reduced investor concerns about an early end to the Fed’s quantitative easing program. Against a consensus forecast for a gain of 150K jobs in November, the economy added just 39K jobs. The Unemployment Rate, which was expected to remain at 9.6%, moved up to 9.8%, the highest level since April. Average Hourly Earnings, an indicator of wage growth, was unchanged from October. From nearly any perspective, this was a weaker than expected report.
FHA Condo Approvals Extended
Last week, I reported that the majority of FHA condo approvals were set to expire on December 7th. This week, FHA announced that due to receiving an overwhelming number of requests all at once, they have extended all condo project approval dates as follows:
|Initial Approval Dates||Previous Expiration Date||New Expiration Date|
|1972 – 1980||December 7, 2010||December 31, 2010|
|1981 – 1985||December 7, 2010||December 31, 2010|
|1986 – 1990||December 7, 2010||May 31, 2011|
|1991 – 1995||December 7, 2010||July 31, 2011|
|1996 – 2000||December 7, 2010||August 31, 2011|
|2001 – 2005||December 7, 2010||September 30, 2011|
|2006 – 2008 (Sept)||December 7, 2010||March 31, 2011|
This is certainly great news and buys some more time to close FHA condo loans without hassle. However, use this grace period wisely and pursue FHA condo approvals before the expiration date approaches. If you are involved with any condo projects, be sure to initiate the recertification or re-approval process as early as possible as it is not anticipated that any further extensions of project approvals will be issued. Please let me know if you have any questions about how to go about this.
Why Your Guy for That recommends Fairfield Mortgage
Fairfield’s Underwriting Department does not spend a lot of time reviewing or cutting appraisals. Instead, they use the very best appraisers in each county and then we trust them to do their job. Also, their appraisers are trained to ALWAYS involve the realtors involved if a value appears to be coming in low. They check to see if there is more data available or comps that can be used before turning in an appraisal. This system works and, as a result, we rarely have appraisal problems on purchase transactions!
Rates are pushing upward. Lets hope they settle back down as the year winds down….
The above rates are for purchase loans for a primary residence and are intended to give you an overall idea of how rates are changing from week to week. Other factors such as credit score, down payment, and number of days the rate is locked all contribute to the exact rate, which is subject to change at any time and without notification. The Conforming rates above apply to purchase loan sizes $150,000 – $417,000 and carry zero discount points. Rates for lower loan amounts are slightly higher. Lower rates are also available for all programs with discount points. Qualification is subject to credit and property approval and other restrictions may apply.
Today is a busy day with the Trade Balance, Import Prices, and Consumer Sentiment reports all due out. Expect more volatility!
This entry was posted on Friday, December 10th, 2010 at 2:43 pm. and is filed under Interest Rates, Mortgage News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.