Mortgage Rates Improved
Rhonda Porter on 08 1, 2008
The Jobs Report this morning wasn’t pretty. We didn’t lose as many jobs in July at 51,000 instead of the expected loss of 75,000 (how is that for sugar coating?). Our unemployment was reported higher at 5.7%. Consider this, many loan originators who are 1099 (vs. W2) and do not qualify for unemployment may not be factored into these stats.
The Tim, I’m sorry…I have no time today for the up and down arrows indicating rate changes for this post…I’ll do happy or sad faces instead (I do plan on using the arrows when I have the time). The improved/worse rates are compared to when I last quoted rates two weeks ago at Rain City Guide.
To see these rates priced with zero points, please click here. By the way, I’ve changed the rate quote to a 30 day lock (instead of 45 days). Most of my purchases are closing within 30 days…if/when this changes, I’ll make the appropriate adjustments.
Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties). The conforming rate quote below is based on owner occupied with a minimum credit score of 720, “full doc” purchase with a sales price of $500,000 and a loan amount of $400,000. This scenario includes reserves (taxes & insurance) not being waived. Rates quoted are priced based on a 30 day lock with no prepayment penalties on any of the rates quoted below.
30 Year Fixed @ 1 Pt: 6.250% (APR 6.410%) improved 0.25% to rate. 
30 Year Fixed with 10 Year Interest Only @ 1 Pt: 6.500% (APR 6.648%) improved 0.125% to rate.
15 Year Fixed @ 1 Pt: 5.875% (APR 6.135%) improved 0.125%
5/1 ARM – LIBOR @ 1 Pt: 5.750% (APR 7.099%) up 0.125% worse by 0.25% 
Conforming-Jumbo Rates. Pricing is based on the same criteria above except where the loan amount is $417,001 – $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $650,000 and a $520,000 loan amount.
30 Year Fixed @ 1 Pt: 6.250% (APR 6.401%) improved 0.375%
30 Year Fixed with 10 Year Interest Only @ 1 Pt: 6.625% (APR 6.767%) improved 0.25% :)
5/1 ARM @ 1 Pt: 6.125% (APR 7.243%) worse 0.25%
JUMBO (Non-Conforming) Rates. Pricing is based on the same criteria above, with the exception that the loan amount is $417,001-$650,000 (20% down). The specific scenario used to price the rates below is a sales price of $850,000 with a loan amount of $680,000.
30 Year Fixed @ 1 Pt: 7.500% (APR 7.656%) improved 0.25%
FHA. Pricing based on credit score of 620 or better and loan amounts up to $362,790 for FHA in King, Snohomish and Pierce Counties.
30 Year Fixed @ 1 Pt: 6.375% (APR 7.158%) improved 0.25%
FHA-Jumbo. Pricing based on loan amounts from $362,791 – $567,500 for King, Snohomish and Pierce Counties. For other loan limits in Washington State, click here.
30 Year Fixed @ 1 Pt: 6.500% (APR 7.258%) improved 0.25%
VA. Pricing based on credit scores of 620 or better based on loan amounts up to $417,000. VA loan amounts over $417,000 are also available. Contact your local Mortgage Professional for more information.
30 Year Fixed @ 1 Pt: 6.500% (APR 6.824%) improved 0.125%
Prime Rate (what HELOCs are based on): 5.000%
This is just a small sample available of rates and products. Rates are as of Friday, August 1, 2008 at 3:00 p.m. and may change at any time. Available programs may change at anytime as well. This is not a guarantee nor is it a commitment of interest rate. To see live rate quotes for various scenarios, check out my Twitter page.
About the Author: Rhonda Porter
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36 Responses to “Mortgage Rates Improved”
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Thanks for the info, Rhonda.
So the APR for 30-year @ 1 point for a conforming jumbo is slightly LESS than for a 30-year @ 1 point conforming. Is that a typo? If not, isn’t that a strange configuration? Is the conforming jumbo an FHA loan? The text doesn’t say.
denismurf, not a typo…and yes, apr is a strange configuration!
I do not recommend shopping rate by apr since it is a flawed calculation. You need to add the closing costs in section 800 of the GFE and compare it to rate, if you’re going to shop and review what the LO is showing for title, escrow, taxes and prepaids (some will use this section to lowball costs to make their GFE appear lower).
The conforming Jumbo is a Fannie/Freddie Jumbo. The FHA Jumbo is FHA.
Rhonda, we lost 1/3 fewer jobs than expected — geez, to me that sounds like a good thing!
leanne, it was a real mixed bag of data yesterday.
Aside from the rate changes, have there been any alterations of available loan products or lending criterion in the last week? For example, I heard that Chase and US Bank made significant changes to the requirements (and availability) of non-conforming products.
It would be really fascinating to get a weekly wrap-up of how lending products and criterion are changing as well as the rates.
This gives a much fuller picture as to how the over-all credit situation is progressing.
Sniglet, I need to check Chase on Monday…I heard they stopped non-conforming on the wholesale side too. Chase, btw, is who I’ve been using for quoting the “true” jumbos. As of Friday, when I posted rates, they were still offering them (at least to correspondent lenders). What’s been interesting to me is that there are lenders who have pulled back or tightened guidelines on the broker (wholesale) side but not on the correspondent side (since correspondents are taking more of the risk than a broker, I suppose).
Good lord. I’M trying to get preapproval in advance of knowing what house to offer on. I have a pile of loan info (GFE and another doc) from Redfin financial, several quotes from Zillow, and another pile from US Bank Mortgage. The Redfin and Zillow quotes give an APR. The US Bank lady said they can’t give an APR until the exact details of the loan are known. And then there’s this website with a “simple” APR calculator.
http://www.locallender.info/consumer-banking/mortgage/apr-calculator.asp
I’ve talked personally to the Redfin and US Bank reps. All I carry away from them is that they lay things out differently from everybody else and calculate APR a little differently too.
If APR is not an accurate measurement of comparability for different loans, what on earth is an accurate measurement? Would it work just to add all costs the borrower pays either directly or through escrow to the APR calculator and ignore the APR’s from the lenders altogether?
I’m fishing and can’t wait to respond to your comment. I would love it if you would email your gfes to me to review and or write a post. btw there is no reason ever for a LO to not provide a GFE and TIL. but don’t shp by APR.
denismurf, first of all, you need to get rate quotes at the same time (within minutes on the same day) as rates change throughout the day. If one lender (or you) wait a few hours before obtaining the GFE, you may not be comparing rates fairly for you (or the lender).
Then, all you can do is add up the closing costs as shown in section 800 of the GFE and compare that with rate.
Make sure the LO will guarantee the closing costs associated with the rate.
There is NO reaons for a LO to not provide you with a GFE/TIL (which shows you the APR, which as you can see is a useless government required tool)…the GFE is not a guarantee…it’s a hypothethical quote. It the LO will not provide one, then don’t work with them.
I will not provide APR without providing the GFE/TIL, which requires a fax number, email, mail (your address) or meeting. I think it’s irresponsible to quote rates without disclosing the detailed cost assocaited with that rate. (not sure if that’s part of the US Bank LO’s issue or not).
APR is another case of good intentions by our Gov…but terribly flawed. Do not rely on it to find you “the best deal”. (I won’t get on my soap box about why you shouldn’t chose your mortgage by lowest rate right now either…I’ve said it before…lucky for you, I’m off to the neighbors to enjoy the salmon they caught today while we were fishing–we just caught a stick).
OK, Rhonda. This is one of those cases where I have to be told something twice before I get it. You said twice to focus on section 800 of the GFE. When I plug those totals into the “costs” line of the APR calculator for the 4 loan proposals I have, I get the following APR’s: 6.414. 6.406, 6.460, and 6.401.
We were using 30-year fixed, 6.375%, 0 points, with $390K loan and $210K down.
In retrospect, the US BAnk LO was just saying she didn’t have enough info to issue a final GFE and thus could not provide an APR either.
I hear you on the questionable validity of APR itself. For me, though, it’s better than nothing as a comparison tool. Thanks for following up and repeating “section 800.”
denis, why not just look at the total cost from section 800?
Did you get all the estimates at the same time on the same day?
Also, (I’ll say it again) unless the LO will guarantee their closing costs, the GFE doesn’t matter. In fact, the GFE doesn’t matter until you’re locking in the rate as the GFE is not a guarantee of rate.
denis, here is a great article that Jillayne wrote on APR last year.
denis, if the LO’s you’ve obtained GFE’s from can still honor the rate quotes, today they would probably be a good deal. Rates have increased approx. 0.125% for 30 year fixed (from a quick glance at the initial rate sheets I’m receiving this morning).
If the rates were not locked (and without a true commitment from you, the LO really shouldn’t lock–nor should they be expected to), then all of your rate quotes are probably now invalid.
I know it’s frustrating selecing a LO/mortgage. There really is a lot more to it than interest rate.
Rhonda, in the past some lenders offered loan locks prior to a buyer having a property under contract with a seller. I would guess no lenders offer that today, or, if they do, they would be expensive, correct?
Hi Leanne,
we do have locks available prior to a borrower finding the property. Here’s the drawback:
The lock period is priced for a longer period (so the rate/lock is more expensive).
The consumer is committed to that rate. So if the rate improves before they have a home, they’re technically committed to the higher rate.
One reason why I don’t promote “lock and shop” type features is because of the that. Plus, lenders track “lock fall out” so if lock in a bunch of shoppers and prior to having a contract and they do not follow through on the lock commitment (either they don’t find a home or rates improve and they/we go elsewhere with the lock); it damages our relationship with that lender.
If we have a certain percentage of “undelivered loans” (locks are a commitment to a specific lender) the lender can terminate our relationship (in this market, one less lender to work with would be painful), increase the cost of doing business with them (by adding fees to the rate/per file etc) and they can also restrict how we do business with them… they can make our lives difficult.
Probably TMI!
Sniglet, I just confirmed that (knock on wood) Chase is still lending jumbo loans for lenders they have correspondent relationships with.
Rhonda wrote: “I just confirmed that (knock on wood) Chase is still lending jumbo loans for lenders they have correspondent relationships with”
Have they changed any of their requirements (e.g. requiring larger down-payments, cash reserves, etc)? By the way, another interesting tid-bit that would be nice to get weekly updates on is changes to mortgage insurance terms/rates.
In short, here is my dream-list for weekly statistics updates to help give a view of how the lending environment is changing:
- latest mortgage rates for different products
- changes in lending criterion/fees from any lenders (e.g. Bank X stopped Jumbos, bank X listed King County as a “declining market”, or changed requirements for larger down-payments)
- changes in mortgage insurance terms/offerings (e.g. insurance rates increased, a given firm stopped offering insurance in Washington state)
Sniglet,
It takes me at least an hour to put together the Friday Rate post. I haven’t even had enough time to add up/down arrows that The Tim was nice enough to provide me.
There is so much constantly changing in the mortgage biz, that would make for a HUGE Friday rate post! And, as a correspondent lender, we’re going through different changes than a retail bank or a mortgage broker is. We all have different guidelines. For example, while it seems Chase is no longer offering jumbos to brokers, they are w/correspondents (like my company).
PMI can vary from company to company as well. It’s just not that simple…unfortuneately.
We have been writing about various lender and pmi guidelines changes…it’s a lot to keep up with! Althought I’ve written about some of the big lenders going down (same w/Jillayne)…I’m not planning on becoming another “mortgage implode” site. With that said, I do hope we’re (or I’m) making it clear to consumers and agents just how much is changing and what is required for financing during this current mortgage climate.
Rhonda wrote: “There is so much constantly changing in the mortgage biz, that would make for a HUGE Friday rate post!”
I understand that you already put in a lot of effort in your Friday posts. This is just my “dream” list.
Actually, in my perfect ideal dream world it would be possible to create some sort of chart that was an amalgam of a number of lending factors to plot how tight/loose mortgage lending was over time. This would consider things like the availability of different products (e.g. 100% finance, option ARM, 30 year fixed, no-doc, etc), insurance rates (e.g. how expensive, availability across mortgage types, etc), the amount of down-payment required, and credit scores needed. Maybe some math whiz could construct some formula, and we could plug in the values back to 1960. It would be VERY interesting to get a comprehensive view of just how our current lending environment compared to decades past. Sometimes I think that our view of real-estate finance has become so warped in the last 10 years that we no longer even remember what “normal” is.
Sniglet, WAKE UP you’re dreaming!
Mortgage history is facinating…I’m sure we’ll all be studying this for quite some time….the history of credit is even more interesting to me. Credit is still very preditory and I think may be a bigger issue than mortgage.
Rhonda, thank you for opening comments again on the friday rate posts.
LHR, you bet!
Hi Sniglet,
I know where that data resides.
The difficult part is extracting that data, and I’m not sure it exists in raw form going back as far as 1960. Depending on how the data has been input and how it’s being stored, it could take a couple of weeks or many months. Since we know most mortgage lending was conforming and FHA/VA until the late 1990s we would gather the data from 1990 forward.
“Normal” is different things to different people. If I were to transform that word for what you’re looking for, I’d look for a point in time when mortgage default rates were relatively low and stable and co-relate that to underwriting guidelines as well as the overall economy at that time, and watch for stable growth with no bubbles.
Jillayne said: “we know most mortgage lending was conforming and FHA/VA until the late 1990s”
Really? Do we know this for a fact? I was under the impression that mortgage lending criterion changed significantly between boom and bust periods. But if everything was largely just of a conforming variety, then it would seem as if there might not have been much of a variation at all in the lending criterion, making credit just as “easy” through good times and ill.
If what you are saying is true (i.e. that non-conforming loans were an insignificant portion of the market prior to the late ’90s), then this would mean there was simply NO such thing as 100% financing, or 80/20 loans, right?
What about things like sellers covering closing costs or offers of vacations, cars, or other goodies? Were these kinds of deals ever done prior to the late ’90s?
Hi Sniglet,
I started in the business in 1985 at a mortgage bank. Everything we offered was FHA, VA, and conforming Fannie Mae. If it didn’t fit guidelines the loan was declined and sometimes, though rarely, brokered wholesale across the street to WaMu to their brand new wholesale lending division.
Anything non-conforming went to a hard money lender, which was a small percentage of mortgages.
There WAS 100% financing. Those loans went to United State’s Veterans.
Next closest was FHA loans which had a complicated formulate that came out to roughly a 3% required downpayment and the entire downpayment could be in the form of a gift from a relative.
Because interest rates were much higher, sellers would often offer to “buy down” the interest rate instead of paying for closing costs.
If there were any other fancy seller concessions offered, they were typically kept off the purchase and sales agreement. At least, this is my experience.
Jillayne said: “Anything non-conforming went to a hard money lender”
What exactly is a “hard money” lender? A loan shark who breaks your legs if you don’t repay? Or is it just some kind of lender who charges significantly higher than standard mortgage rates?
Both.
I liked it better when it was lettered. A Paper, B Paper, C Paper…all the way to Z Paper (hard money) At least people could understand where they stood.
They used to charge money up front for B and C paper in case of default, so they had more of a cushion between high interest rates and up front costs..
Aren’t the rates on Sub-Prime much higher because there is “risk” involved? If no one defaulted, the high rates wouldn’t have been warranted. So why would the lenders be surprised that the high risk loans didn’t work out? Isn’t that what “high risk” means?
Ardell, we refer to loans sometimes as A, B or C Paper…it’s just been replaced with “Prime”, “Alt-A”, “Sub-Prime” and “Hard Money”.
I’ve been cleaning up my home office and just found a rate sheet from First Franklin dated October 2, 2006:
100% Financing (1 mortgage) 30 Yr Fxd (3 year prepay):
Full Doc
700 or better credit: 8.3%
620-629 credit: 9.3%
580-589: 10.95
Stated Income/No Income Ver.
700 or better: 8.9%
640: 9.55%
(640 is the lowest on this rate sheet for this product. With 10% down, a 600 credit score could state income w/a rate of 9.45%).
Jillayne said: “Everything we offered was FHA, VA, and conforming Fannie Mae. If it didn’t fit guidelines the loan was declined”
The more I ponder this, the more I wonder just what it is that today’s policy makers are really trying to accomplish by re-starting the private mortgage securities market? If we return to the “old” days, when nearly all loans were of a GSE conforming variety (as Jillayne illustrates), then how will that have helped re-inflate the real-estate market?
Is the real objective here to create investor demand for NON conforming loans? If so, I don’t see why this would necessarily be a good thing. The last thing we need is to encourage people with dodgy credit or inadequate financial resources to buy homes.
I just don’t understand what the goal is in Paulson’s efforts to get private mortgage financing going (e.g. covered bonds, etc). Why would any investor worth their salt would ever want to buy a private mortgage security that met the same criterion as the conforming GSE variety unless they were getting a higher interest rate (i.e. because there is no government guarantee)? What consumer would be willing to take such a private mortgage with higher than GSE rates if they still had to meet the exact same qualifications?
In other words, if the only mortgages made are going to meet GSE guidelines, then there is NO logical reason for private financing to exist.
Sniglet, Jillayne asked me to forward this message to you:
“pls let sniglet know I have an answer re covered bonds but I’m teaching until 1 and will post a reply later”.
Hi Sniglet,
Here’s our future: Subprime quality deals will be directed towards the FHA insurance program.
The GSE’s (Fannie and Freddie) will accept only the cream puff conforming loans. Good credit, equity/downpayment.
Paulson’s looking for a place for all the middle tier loans.
Covered bonds means the banks will have to take some liability for the product originated at the retail level. What we can expect from this product line is much higher interest rates to better match the risk, and tight underwriting guidelines, since the banks are now extremely risk-averse, and will be for many, many years into the future.
Hard money is a growth area for buyers and refinancing homeowners who can’t fit into any of these three boxes.
We should expect the government to continue to try to mess with the free market by coming up with creative solutions like FHA Secure and HopeNow which will help some but not all. Some of these homeowners will lose their homes and re-enter the housing market as renters.
Let’s just hope the government doesn’t kill FHA by loading it with too many homeowners who will eventually re-default. The unintentional consequences of this are too great for me to handle. I’d rather stay in denial on this for just a few more hours before I lash out at the idiots trying to revive the downpayment assistance fraud.
Jillayne wrote: “Paulson’s looking for a place for all the middle tier loans”
What would this middle tier be? It would be loans to people with poorer credit and financial situations than the plain-vanilla GSE variety? If this is the case, I just can’t see why any investor would want to put their money in them unless they were being compensated with a significantly higher interest rate than GSE loans.
And why would consumers want to get these middle-tier loans if they had such high interest rates?
All interest rates will be much much higher than they are now in all tiers.
“why would consumers want to get these middle-tier loans”
Why did consumers fall for the subprime and Alt A loans? Arguably, those interest rates were higher than conforming, yet I know…still low by historical standards.
Perhaps Paulson will tell us that the free market will drive prices (rates?) down with competition in the “covered bond” market.
Sniglet-
I think Paulson believes that CBs will absorb some of the loans away from F&F. It will encourage banks to finance the loans themselves instead of continuing to sell to F&F. It could also fund loans that F&F won’t take if standards continue to tighten.
Covered bonds work differently then MBS. They have structural features that makes the default of interest and principal remote even if the bank goes bankrupt. I’ve commented about this before on another post, but let me know if you want more details.
The all-in cost for CB’s will need to fall somewhere between F&F and FHLB for banks to make it work. It will effectively replace MBS, but with tighter standards, more collateral restrictions and better default protections.
[...] Changes to rate are noted with a :) for a rate improvement or
when rates are higher than what I posted last week. Seems like ever since The Tim from Seattle Bubble gave me up & down arrows, I’ve [...]