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Mortgage Interest Rates Going Higher?

In the latest mortgage lead report, the Lead Planet indicated that mortgage applications rose as home loan rates fell. Credit standards have been a significant factor in loan applicants qualifying for the record low interest rates that have been advertised. The fact is that bad credit VA loan rates are just as low as the rates are for borrowers with good credit scores. The mortgage lead generation company publishes these reports as a snapshot of the lowest and average interest rates available within the Lead Planet network of loan companies. Read the entire article, Will Mortgage Rates Rise in 2011?

2010 the Summer of Records for Mortgage Rate Lows

It seemed like every week this summer the mortgage interest rate records were broken with new lows. Conforming, VA and FHA mortgage rates all glimmered at 40-year lows. But even as a glut of unsold inventory keeps the housing market from recovering, nearly a third of Americans can’t qualify for home mortgages, according to new data from online real estate search company Zillow.

Home Loan Rates Starting at 4.25%

Potenetial homeowners with credit scores below 620 points were largely unable to take out thirty-year home loans in the first half of September, even if they offered down payments as high as 25 %, Zillow found after analyzing more than 25,000 loan quotes and purchase requests on its website. A full 29.3% of Americans have a credit score that low, Zillow says, citing data from myFICO. The time to compare mortgage rates has arrived, so don’t miss this opportunity.

Mortgage interest rates, meanwhile, are at a levels not seen since Freddie Mac started recording interest rates in 1971. According to data compiled by the Federal Reserve the average mortgage rate on a thirty-year mortgage was 4.37% as of September 16th. The St. Louis Fed has data going back to 1971 and, in that period, before 2009, the interest rate never fallen below 5%.

These days, according to Zillow, the lowest home loan rates remain at 4.25%, available only to those with a credit score above 720 points about 47% of Americans. The higher rates, ranging from 4.44 to 4.9%, are available to about 23.8% of Americans. The remaining 29.3% of the United States cannot get approved for home mortgage loans at all.

A variety of factors, including a high volume of foreclosures and weak demand, have depressed the housing market to such an extent that some experts say it won’t rebound for three years. But mortgage lenders are understandably cautious. While easily accessible home loans might contribute to a housing recovery, lenders are still shell-shocked from the aftermath of the housing bubble. Banks have been writing off debt in record numbers, the charge-off rate this year has been higher than any year since at least 1988, according to data from the Saint Louis Fed.

Fed Makes History by Cutting Interest Rates to the Lowest Level

The Federal Reserve stepped to the financial platform and announced key interest rates that reach historic levels. Mortgage lenders reported interest rates at 5% for mortgage refinancing and home financing. Many mortgage brokers believe the rumors are true that the government will induce lenders to offer mortgage rates in the 4.5% range.”

The Fed’s unprecedented move to further reduce its fed funds target rate to a range of 0 to 0.25% rather than a fixed point was a surprise. The move is an acknowledgment that interest rates in the marketplace had been well below the Fed’s 1% target, which it set at its previous meeting on October 29. The central bank also cut the lending rate for loans directly to banks. “Today was a reminder that the Fed was on the case,” said Jim McDonald, director of equity research at Northern Trust in Chicago. “It was a reaffirmation of their willingness to be very aggressive.” “What we heard today was not revolutionarily different but it was a reminder that they are committed to using their balance sheet to the fullest extent to repair the financial markets and stimulate the economy.”

Many analysts had expected the Fed would cut its fed funds rate to 0.5% from 1%. “In some senses the whole point of this meeting was to say ‘Quit watching interest rates, watch the other things that we can and will do,’” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland. Jack A. Ablin, chief investment officer at Harris Private Bank, said the fact that the Fed targeted a range for its fed fund rate indicates that policy makers did not want to bring the rate all the way to zero. Further rate cuts could have create problems with complications for money market funds, in which fees might outpace yields.

Freddie Mac Eliminates Stated Income and Reduces Jumbo Fees

Freddie Mac announced they are lowering their delivery fees on jumbo mortgage loans. This will make many of the mortgage lenders and brokers happy because often times they were forced to eat the cost to remain competitive with shopping borrowers. Freddie also announced the were discontinuing to purchase of stated-income home loans. Freddie is eliminating the extra delivery fees that it charged on fixed-rate purchase and “no cash-out” home refinancing jumbo mortgages, beginning Jan. 2, when the maximum loan limit for the government sponsored enterprise is scheduled to drop from $729,750 to $625,000.

The GSE also is reducing its delivery fees on fixed-rate, cash mortgage refinancing of jumbo loans, according to a Freddie Bulletin to seller/servicers. Fannie Mae and Freddie began purchasing jumbo loans earlier this year when Congress the raised the maximum loan limit from $417,000 to $729,750 as part of an economic stimulus bill. Freddie also used the bulletin to tell lenders that is “discontinuing the purchase of all mortgages originated with stated income and stated assets, including Loan Prospector Accept Plus Mortgages.”