The U.S. Census Bureau and Department of Housing and Urban Development reported that housing starts were up again 5.9% during the month of July. This time around, multi-family home construction rebounded with a 26% gain from the previous month while single family home construction showed a slight drop of 2.2%. Whether this trend will remain is unknown since the risk of rising mortgage rates continues to question if there will be an impact on the housing market.
According to the most recent survey of wholesale and direct lenders performed by FreeRateUpdate.com, current conforming 30 year fixed mortgage rates increased and are now as low as 4.125% (APR 4.305%); 15 year fixed mortgage interest rates are as low as 3.00% (APR 3.131%) and 5/1 adjustable mortgage rates are as low as 2.375% (APR 2.651%). Having good credit is required in order to receive low rates from lenders.
The Mortgage Bankers Association reported that mortgage applications dropped 4.7% for the week ending August 9th. Of that number, the Purchase Index fell 5% from the previous week. While home buyers are rushing to beat any rise in mortgage rates, current homeowners have been holding back from refinancing for several weeks. The refinance share of applications remained the same at 63% even though the refinance index decreased 4%. The share of HARP loan refinance applications fell to 35%. For most of the summer months, HARP activity had been on a steady increase.
Current FHA 30 year fixed mortgage rates also increased and are now as low as 3.750% (APR 3.752%); FHA 15 year fixed rates are as low as 3.250% (APR 3.856%) and FHA 5/1 adjustable mortgage rates are as low as 2.500% (APR 2.925%). The MBAA also reported that purchase applications for government loans were at 29%. The long term average in the past has been 38%. FHA mortgage volume, which falls into the category of government loans, has been hurt by the recent increase in the annual mortgage insurance fee that increased earlier this summer.
In addition, FHA closing costs (APR) are high because of the upfront mortgage insurance premium and various FHA fees which are charged to the borrower. However, borrowers often use seller concessions to offset these expenses. FHA streamline refinances are a popular FHA loan product which allows FHA mortgage holders to move to a better mortgage without the need of any documentation or an appraisal. This FHA loan product is also being offered until the end of 2013 with reduced upfront and annual mortgage insurance premiums for loans that were endorsed prior to June 1, 2009.
Jumbo 30 year fixed mortgage rates are as low as 4.125% (APR 4.402%), jumbo 15 year fixed rates are as low as 3.250% (APR 3.586%) and jumbo 5/1 adjustable mortgage rates are as low as 2.500% (APR 2.687%). Low jumbo rates are available for those borrowers who have maintained excellent credit. Borrowers are also required to document employment, income and assets when qualifying for a jumbo loan. Volume for jumbo loans has been on the increase this year while jumbo rates remained very competitive amongst lenders. Jumbo rates remain very low, either the same or slightly higher than conforming rates.
MBS prices (mortgage backed securities) have an impact on mortgage rates which move in the opposite direction. Investors continue to speculate that the Feds with begin to taper their bond buying activity during the third quarter of this year. This has hurt MBS prices which have been dropping for several days. In turn, mortgage rates have been at risk of unfavorable pricing over the past week.
FreeRateUpdate.com researches and reports advertised rates of active lenders within the FreeRateUpdate.com network