Current Mortgage rates are holding low despite severe adversity.
Freddie Mac, in its weekly survey of more than 100 lenders nationwide, reported the average thirty-year rate fell 2 basis points (0.02%) to 4.15% this week.
That's not what anyone expected.
Multiple forces put upward pressure on rates, but none have been successful -- so far.
Federal Reserve Chair Janet Yellen delivered her semi-annual testimony to Congress, stating the Fed may move up its timetable for an interest rate hike. Analysts expect that to happen as early as March.
Inflation is edging up, and the job market is hot. It seems nothing can stop the red-hot stock market.
These forces should have caused a massive rate jump this week, but instead, rates fell.
As a mortgage shopper, this is a limited opportunity at a low rate.Click to see today's rates (Feb 19th, 2017)
Each week, mortgage agency Freddie Mac surveys 125 lenders nationwide for its Primary Mortgage Market Survey (PMMS), a snapshot of current mortgage interest rates.
It asks mortgage companies, banks, and credit unions, and other lenders their current rate for a well-qualified borrower putting 20% down, and paying "discount points," or extra fees that directly reduce the rate.
The agency polls lenders Monday through Wednesday for the Thursday release. That's why it's surprising that lenders didn't report higher rates this week.
Fed Chair Janet Yellen told Congress on Tuesday that it would be unwise to hold the Federal Fund Rate at current levels much longer.
Unemployment is low, and workers are getting paid more. Inflation is creeping up to the Fed's target rate of 2% annually.
All these factors are pointing to a rate hike sooner than anyone expected.
The surprise, then, is that Freddie Mac didn't report higher rates as it collected data Tuesday and Wednesday. Are mortgage shoppers in for higher rates in coming days? Probably.
But for now, rates are still holding to 2017 lows.Click to see today's rates (Feb 19th, 2017)
Freddie Mac's survey is based on a "rate-and-term" loan -- a refinance for the purpose of lowering the consumer's rate or the length of their loan.
But those aren't the only reasons homeowners refinance.
Homeowners also tap into their home equity via a cash-out refinance, and they are doing a lot more of that in 2017 as home values rise.
Values are up more than 40% since 2011, according to the Existing Home Sales report published by the National Association of REALTORS®
Homeowners are discovering that they can receive ultra-low rates on a cash-out refinance to accomplish a variety of financial goals:
Here's how it works.
A homeowner owes $200,000, but the home is worth $350,000. The homeowner can take out a new loan up to 80% of the home's value.
In this case, that would mean cash proceeds up to $80,000 that the homeowner could use for any purpose.
Mortgage rates are only slightly higher for cash-out refinances than for rate-and-term loans.
And, an interest rate you receive for a mortgage could be much less than rates paid for other loans and debt.
The nationwide average for credit cards is more than 15%, according to CreditCards.com. Some student loans issued before 2011, and those issued to graduate students or parents come with rates near 7%.
Mortgage rates can be had solidly in the 4s today, even for cash-out mortgages. And, interest paid could be tax deductible.
A debt consolidation cash-out home mortgage, then, could be a means to reduce monthly cost of living.Click to see today's rates (Feb 19th, 2017)
Freddie Mac requests conventional/conforming loan rates to arrive at its national average rate.
But it leaves out mortgage rates for government-sponsored programs that could come with even lower costs.
In today's rising rate environment, a non-conforming loan could be the right decision for some homeowners.
Three loan programs in particular -- the USDA home loan, VA mortgage, and FHA loan -- are government-backed mortgages with rates still in the 3s.
The USDA loan is available in less dense neighborhoods across the U.S. It offers zero down payment and lenient credit score minimums.
Eligibility is based, in part, on location of the home. Ninety-seven percent of U.S. land mass is eligible for a USDA loan, so homebuyers looking for housing outside of major metropolitan areas should check this option.
The zero-down VA home loan program comes with lower-than-conventional rates, according to loan software provider Ellie Mae, undercutting conventional loan rates by an impressive 25 basis points (0.25%).
Veterans with as little as 90 days of service history could be eligible for a VA loan.
With rates falling, the FHA loan rates are dipping into the high-3s. About forty percent of home buyers under the age of 37 buy their first home with FHA.
It's no surprise.
FHA requires just 3.5% down and is very lenient about credit scores. According to a report released by Ellie Mae this month, 56% of FHA borrowers had a credit score between 600 and 699.
Only 16% of conventional loan applicants had similar scores.
The FHA home loan is the go-to program for home buyers without perfect credit profiles, little cash to put down, and the desire to become a homeowner as soon as possible.
Many lenders are offering these loan types at rates in the 3s, even as conventional rates are solidly above 4%.
Today's interest rates are still low, despite the post-election jump. Historically any rate in the 4% range was considered "too good to be true." But those rates are still available.
Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.Click to see today's rates (Feb 19th, 2017)
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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2017 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)