Rates on conforming loans up to $417k and super-conforming loans up to $729k end this week down another .125% following two weeks of already-low rates. Rates for jumbo loans above $729k aren’t down as much because those rates don’t trade all day every day like conforming loan rates do. The mortgage bonds that rates are tied rallied 9 straight trading sessions (on tame inflation data and stock weakness) before giving up ground today (on news of “only” 216k jobs lost in August). All year, mortgage bonds have traded up for about two to three sessions before correcting, so this past two weeks may put bonds an overbought position and rates will rise next week as bonds sell off.
It’s a light economic calendar following the holiday weekend, so the rate moving news will be Treasury auctions Tuesday (3yr Note), Wednesday (10yr Note), and Thursday (30yr Bond). Especially the 10yr and 30yr auctions will create direct supply competition for mortgage bonds to compete against, and this is very likely to cause a selloff in mortgage bonds, so for anyone who has noticed the rate drops of recent weeks and is ready to transact—either in contract on a purchase or ready to do a refi—Tuesday looks to be the best rate lock day.
TWO KEY FALL DEADLINES FOR HOMEBUYERS
Two key deadlines as we enter the Fall officially: (1) For those who want to take advantage of the Federal tax credit for homebuyers, you need to close your home purchase by November 30, and (2) for those planning to buy a condo using FHA financing and the entire condo building isn’t already approved by FHA, October 1 is your deadline to be in contract and still be eligible for a unit-specific ‘Spot Approval’ for an FHA condo loan. If you miss the FHA spot approval deadline, I covered the process for handling this last week, let me know if you want me to send it again.
Have a great holiday weekend…
CONFORMING RATES ($200,000 – $417,000) – 1 POINT
30 Year: 5.0% (5.14% APR)
FHA 30 Year: 5.0% (5.16% APR)
5/1 ARM: 3.75% (3.9% APR)
SUPER-CONFORMING RATES ($417,001 to $729,750 cap by county) – 1 POINT
30 Year: 5.25% (5.41% APR)
FHA 30 Year: 5.25% (5.43% APR)
5/1 ARM: 4.0% (4.16% APR)
JUMBO RATES ($625,500 – $3,500,000) – 1 POINT
30 Year: 6.0% (6.275% APR)
10/1 ARM: 6.25% (6.39% APR)
5/1 ARM: 5.25% (5.43% APR)
Scenarios assume full doc pricing on purchase or rate/term refi (but not cash-out refi) loans for borrower with 720 FICO score or greater, at least 20% equity (unless FHA), and 6-12 months reserves left over after close (retirement assets counted at 70% of value for reserves). Better or worse rates apply to specific client profiles. Better rates are available using tax deductible points. ARM rates adjust the first month after initial fixed period shown, and once per year thereafter until year 30. Adjusted rate calculated by adding 2.25% margin to 1yr LIBOR index at time of adjustment. At first adjustment LIBOR+margin cannot exceed start rate+5%, subsequent yearly adjustments can never be greater than 2% per year, total of all adjustments for 30yr life of loan can never exceed start rate+5%. This is not a loan commitment nor a loan guarantee, rates based on loan amount ranges shown and rates available at the time of production. Rates subject to change without notice. California Department of Real Estate license #01376428. Equal Housing Lender.
Vice President, Mortgage Consultant
DRE License #01376428