Mortgage Rates for Friday Afternoon
Rhonda Porter on 12 5, 2008
This morning’s Jobs Report was even worse than expected with 533,000 payroll jobs eliminated in November along with downside revisions to September and October’s report. Mortgage rates are much improved over the last rate post (pre-Thanksgiving) and slightly higer than yesterday when 30 year fixed rates dipped around 5%. This market is proof of why you need to work with a loan originator who has the ability to either renegotiate your rate after locking with the lender (float down) as most banks are offering this (check with your LO before you enter into a transaction).
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 mid-low credit score of 720-739, “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 45 day lock with no prepayment penalties on any of the rates quoted below.
30 Year Fixed @ 1 Pt: 5.125% (APR 5.262%) 
0.50% to rate
30 Year Fixed with 10 Year Interest Only @ 1 Pt: 6.625% (APR 6.767%) 0.375% to rate
15 Year Fixed @ 1 Pt: 4.625% (APR 4.745%) 0.75% to rate
Conforming-Jumbo/High Balance Rates. Pricing is based on the same criteria above except where the loan amount is $417,001 – $506,000 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $625,000 and a $500,000 loan amount.
30 Year Fixed @ 1 Pt: 5.375% (APR 5.499%) 0.625% to rate
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: 5.750% (APR 6.432%) 0.25% to rate
FHA-Jumbo. Pricing based on loan amounts from $362,791 – $567,500 for King, Snohomish and Pierce Counties.
30 Year Fixed @ 1 Pt: Pt: 6.250% (APR 6.932%) 0.25% to rate
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.
30 Year Fixed @ 1 Pt: 5.875% (APR 5.991%). 0.25% to rate
Non-owner occupied/Investment Property. Pricing based on 30% down payment with a $400,000 sales price and credit scores between 720-739.
30 Year Fixed @ 1 Pt: 6.750% (APR 6.929%). 0.125% to rate
Prime Rate (what HELOCs are based on): 4.00%
12 Month LIBOR (what a majority of ARMs are based on): 2.64875% per WSJ.
This is just a small sample available of rates and products. Rates are as of Friday, December 5, 2008 at 12:30 p.m. and may change at any time. Available programs may change at anytime as well. Check out RCG’s new Mortgage Info page for live rate quotes via my Twitter feed.
This is not a guarantee nor is it a commitment of interest rate.
About the Author: Rhonda Porter
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17 Responses to “Mortgage Rates for Friday Afternoon”
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Sign of the times: Just over a week after I closed on my condo, I’m now refinancing. The 0.5% drop in rates since I purchased makes that worthwhile.
sampai, a 0.5% drop in rate may only beworth refinancing if you’re getting the refi at zero points and no closing costs. Be sure to factor in how quickly you will break even. Good luck!
Sampai, Rhonda could perhaps comment on this better, but IMHO when looking at the difference in rates you should look at the note rate of your existing loan and the APR of the new one. I doubt that has a .5% difference. If you just compare note rate to note rate, or APR to APR, you ignore the fact that you’ve already paid the items that work into your existing APR, and can avoid the items that will work into the new APR.
Kary, I don’t recommend using APR as a tool for comparing interest rates. Note rate is what should be used–and how long it will take to break even on the cost of the refinance.
Sometimes when we get down to low rates, people lose sight of the cost of the refi and focus on really wanting X% for a rate. They might even pay extra points to get X%. But if they’re not going to break even on the cost of the refi, it’s not worth it.
But if the new APR isn’t lower than the existing note rate, wouldn’t it follow that it would the refinance would never pay off no matter how far you went out? My suggestion was more of a first step shortcut. If it doesn’t meet that simple test, don’t go any further. I didn’t mean to suggest that if it was lower, refinance, but I wasn’t clear on that.
Kary, I still would not rely on APR for anything. It’s too easily manipulated and it’s just not an accurate tool. For example, if a consumer was considering refinancing into a 5 or 7 year ARM (they’re not planning on retaining the mortgage beyond the fixed period and they will break even on the closing cost in time); if you were to look at the APR of the ARM, the rate is much higher than the same rate w/a 30 year fixed–our company factors ARM APRs based on “worse case scenario” with adjustments.
Good point on the ARM factor. Although is anyone getting ARMs today? If the existing loan was an ARM I wouldn’t even bother doing a calculation–I’d refinance into fixed rate. But that’s been my position for over 20 years.
I have heard that APRs are inconsistent between lenders. That it is an imperfect tool.
What’s interesting about this is how homeowners seem to learn of this, and attempt to refinance. But the $7,500 first time homebuyer’s “tax credit” is different. Very few people seem to know about that for some reason. I wonder what the difference is?
Yes, I have looked at the costs of the refi. I would recover the up-front cost of the refi through interest savings in about two years. After that, the lower interest rate saves me quite a bit every month.
I can only do this because I have the sort of FICO score that can withstand many credit inquiries and such. Otherwise, I’d probably have to wait a few months before I could refi.
Also, it helps that my loan is large enough that the cost of the refi can be recovered through interest rate reductions within two years.
And yes, Kary, the difference between the APR of the new loan and the note rate of the current one is about 0.5%. That’s a good test that I hadn’t thought of applying earlier (I was just using the calculations I outlined above.)
Personally, if I was still a home-owner I would wait until interest rates dropped even lower before re-financing. I expect that rates will drop into the 4% range within the next couple years.
Rates are going to keep plummeting as we enter a massive deflationary cycle (i.e. where all asset prices fall in relation to the dollar), so rates will just get better and better (for the smaller pool of buyers who can qualify for loans) in the 3 to 5 years.
By the way, I have a podcast on why mortgage rates will keep going lower at http://msurkan.podbean.com.
If a home owner can refinance w/no-cost and still have monthly savings (ie the cost of the refinance is financed into the rate) then it would make sense to proceed with a refinance because there is no “break even” time.
The home owner is ahead of the game as soon as they stop paying the higher interest on their existing mortgage. There would be no need to wait for a rate that isn’t here yet…plus, if they refi using a “no cost” refi and if rates continue to go down to the 4% range–then they are still ahead.
Sniglet:
You may be right about interest rates getting lower, but your most accurate prediction is,
“(for the smaller pool of buyers who can qualify for loans)”
I have no doubt that banks will become choosier about who they lend money to, and what figure they accept for house valuation. That has been a steady and reliable trend, only interrupted (barely), by the mandated creation of Conforming Jumbo loan amounts (locally between $417K and $506K).
A borrower should VERY carefully consider the benefits of taking advantage of a good opportunity on the table now, rather than wait for a potential opportunity later.
As long as not too much money is invested in acquiring today’s low rate, it may be better to take it now, and refi again if your predictions come true (and if the borrower would still qualify).
The Fed starts buying MBS on Jan 1st, 2009. That should continue the improvement in rates.
Georgia FHA, typically that would do it… nothing is certain in this market until it happens. I’m recommending that clients proceed with mortgage financing now and work with a mortgage professional who has the ability to renegotiate/float down the rate should it improve after the lock during the transaction. This provides protection to the consumer by providing a limit to how high the rate will be while allowing the option to obtain an improved rate in this volatile market.
Where did you here of the date the Feds will begin buying MBS? Do you have a link?
No link on the date, it was premium content on Mortgage Market Guide (great service!).
However, I agree with your assessment about working with a LO with the ability to renegotiate / float down. The rates have responded well since the announcement on November 25th that they were going to buy (FNMA 6.0% Bond gained 84 bps that day).
http://money.cnn.com/2008/11/25/news/economy/paulson_consumer/index.htm?postversion=2008112514
Georgia FHA, I also subscribe to MMG as well…and I really appreciate their live bond quotes…I must admit I don’t take everything they say for gospel.
I’m not seeing where they have the January 1, 2009 date for the Fed to buy MBS and I don’t see that date referenced in the link you’ve provided. Would you mind sending me an email with where you’re seeing this on MMG?
Accoding to the release here
http://www.federalreserve.gov/newsevents/press/monetary/20081125b.htm
it looks like they said they would begin buying them in the week following the announcement of Nov 25th.
The rates sure have responded!
Today I was seeing an FHA 30 yr fixed offered at 5%, with no discount points. My eyes bugged out!