Mortgage rates rose sharply after the Federal Reserve changed its messaging to the markets last week.
Conforming 30-year fixed rate mortgage rates moved to a 7-week high and FHA mortgage rates climbed, too. This week, mortgage rates may rise again. There is little economic news to affect low mortgage rates positively.
Shopping for a mortgage? It may be prudent to get quotes early in the week.
Mortgage rates worsened last week, climbing close to 0.125 percentage point. However, according to Freddie Mac's weekly mortgage rate survey of 125 U.S. banks, the 30-year and 15-year fixed rate mortgage rates did the opposite.
Freddie Mac reports that mortgage rates fell.
Freddie Mac's Primary Mortgage Market Survey (PMMS) shows the average conforming 30-year fixed rate mortgage rate slipping 0.05 percentage points to 4.32% nationwide; and the average conforming 15-year fixed rate mortgage rate down 0.06 percentage points to reach 3.32%.
In order to lock either rate, the survey shows, mortgage borrowers should expect 0.6 discount points to be charged at closing, along with a full set of mortgage closing costs.
Discount points are a one-time mortgage cost, paid as cash or added to your loan balance. They're considered "prepaid mortgage interest", can be tax-deductible, and give borrowers access to below-par mortgage rates.
The cost of a discount point is equal to one percent of your first mortgage loan size.
A borrower in Miami, Florida, therefore, borrowing at the 2014 conforming loan limit of $417,000, should expect one discount point to cost $4,170. A borrower in Orange County borrowing at the local limit of $625,500 should expect to pay $6,250.
Discount points are optional. Borrowers choosing to "waive" discount points can expect to receive higher rates from their bank.
Depending on loan size, a loan with no points may run one-eighth of a percentage point higher. A loan with no points and no closing costs may run one-quarter of a percentage point higher.
Regardless, Freddie Mac's survey, which "closed" Wednesday morning, failed to capture last week's late-week action, which began Wednesday afternoon with the adjourning of the Federal Reserve meeting.
Mortgage rates jumped as much as 0.250 percentage points as the week came to a close. Today's mortgage rates are higher than what Freddie Mac has published.
Mortgage rates rose last week, but they remain near all-time lows. So, with the spring home buying season about to get started, and with demand for homes expected to rise, U.S. home affordability may be nearing its peak.
7 months ago, mortgage rates reached a two-year high, hitting 4.58% on average. With the Federal Reserve expected to "taper" its rate-suppressing QE3 stimulus program, investors feared the worst. Mortgage rates had made their fastest 2-month climb in more than 30 years.
In the time since, however, mortgage rates have been on decline.
The U.S. economy limped through the winter months, affecting both domestic output and spending. Demand in the housing market softened, unexpectedly. And, most notably, concerns of global economic weakness drove a bout of safe-haven buying which pumped demand for mortgage-backed securities (MBS).
Foreign investors have entered the U.S. market faster than the Federal Reserve can exit it; and that's helping to keep mortgage rates low.
30-year fixed rate mortgage rates have remained below 4.50% for more than 2 months. Refinance opportunities have re-opened for the FHA Streamline Refinance and VA Streamline Refinance (IRRRL), as well as for the FHFA-backed HARP program. Plus, the availability of low- and no-downpayment mortgages is still high.
The FHA offers a 3.5% downpayment program open to all U.S. home buyers and qualified buyers can get access to the USDA No Money Down program with low mortgage insurance premiums.
With the start of spring, mortgage rates and demand for homes may begin to reverse higher. Rising mortgage rates and rising home values can combine to increase housing costs dramatically.
The least expensive time to buy a home this year may be during the next few weeks.
Mortgage rates are expected to rise this week, following the momentum of last week's action. There are several economic reports scheduled for release, and multiple Federal Reserve speakers slated to appear publicly.
Astute rate shoppers will be aware of upcoming events, which include :
In addition to the events above, there are several U.S. Treasury auctions slated for this week which may affect mortgage rates. Wednesday, the Treasury will auction 5-year notes and, Thursday, it will auction 7-year notes.
U.S. Treasury note rates don't affect mortgage rates but when demand for treasuries are high, it signals demand for U.S.-backed debt, in general, which includes mortgage-backed securities.
Strong auction results are typically good for U.S. mortgage rates.
Mortgage rates climbed last week, and are expected to rise again. It may be prudent to comparison shop or consider a refinance of your existing home loan. Mortgage rates may be closer to reach 5 percent than dipping to the 3s.
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The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2015 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)