Things have been quite active this past week with the debt ceiling crisis coming to an end last Tuesday when an agreement was finally reached at the last minute. By the end of the week, Standard and Poor's went ahead and downgraded the U.S. credit rating. Although the stock market is dropping, low mortgage rates have survived both the debt crisis and U.S. downgrade.
Freerateupdate.com's daily survey of wholesale and direct lenders show that low mortgage rates have made it through these episodes and remain stable with only the jumbo 30 year fixed mortgage rate fluctuating by .125%. Remaining the same, 30 year fixed mortgage rates are at 4.125%, 15 year fixed mortgage rates are at 3.500% and 5/1 adjustable mortgage rates are at 2.750%. With good credit, borrowers can obtain these low mortgage rates with 0.7 to 1% origination fee. Currently, conforming mortgage rates are at the lowest levels of the year and remain a good opportunity for borrowers who receive lender approval.
By combining low FHA mortgage rates, that have remained steady, and low down payment requirements, borrowers can still attain affordable home ownership. Current FHA 30 year mortgage rates are at 4.000%, FHA 15 year mortgage rates are at 3.500% and FHA 5/1 adjustable mortgage rates are at 3.250%. FHA will accept gifts from family, employers and unions provided the necessary documentation is approved. Grants and loans issued by state, county and local housing initiatives are also combined with FHA mortgages in order to make the final transaction even more affordable. Although FHA closing costs (APR) tend to be higher because of various FHA fees and the upfront mortgage insurance premium, the benefits of FHA mortgages far outweigh these expenses.
Jumbo 30 year fixed mortgage rates are at 4.750%, which is up .125% from Wednesday. Remaining the same, jumbo 15 year fixed mortgage rates are at 4.375% and jumbo 5/1 adjustable mortgage rates are at 3.250%. Jumbo mortgage loans are not government insured and, therefore, are considered risky transactions. Because of this, borrowers must have excellent credit in order to obtain these low jumbo mortgage rates with 0.7 to 1% origination point. High end borrowers have benefited from affordable jumbo mortgage rates that have followed in the path of other mortgage rates by remaining competitive and low.
MBS prices (mortgage backed securities) were up most of the week, went down on Friday, and again are up this week. Mortgage rates change in the opposite direction of MBS prices. On the bright side, private sector jobs increased and mortgage applications were up as reported by the Mortgage Banker's Association. On the down side, factory orders decreased. Overall, investors are reacting to Friday's news that Standard and Poor's proceeded to downgrade the U.S. credit rating which turned out to be a boost for the bond market while, at the same time, tanking stocks. If investors continue to seek the safety of bonds, mortgage rates should remain low.
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