Chicago Illinois Mortgage Rates Week in Review for the Week Ending 04/09/2012
14th May 2012
Feeling frustrated because you haven’t heard enough about Greece lately? For a good portion of the last year, the financial news seemed to talk about nothing but Greece. Band aids have been applied, and when the band aid didn’t stop the bleeding, the financial equivalent for duct tape was 
generously wrapped around it, but it is looking like that will not be enough, and Greece is back in the new in a big way again. Last week Greece had their elections, and in a reaction to the severe austerity programs they have taken on (in order to show some signs of wanting to pay down their debt so they can stay in the European Union) minority parties on both the far right and far left fringes took large percentages of the vote. In a parliamentary system, if no one party has enough votes to govern on their own, they have to find partners to form a coalition with other groups. If Republicans and Democrats can’t agree on anything, what are the chances of agreement between Nazis and Communists (or the modern Greek versions)? If Greece is not able to form a new coalition government, they will have a new election on June 17th to try again. It is now looking more likely that Greece will exit the European Union, and strike out on its own. Greece by itself is a small economy and not much of a global factor, but the fear is that if Greece exits, what will happen to Spain, and Italy and the European Union itself. This is the financial domino theory in action, and if Greece falls, what happens next? This whole drama has been going on for a long time, but experts are thinking the end game is coming soon.
The other big news this week was JP Morgan’s announcement of trading losses of at least $2 billion dollars. This wasn’t a rogue trader making a bad bet, but part of their risk management strategy, approved at the very top of the corporate chain. This has been embarrassing for CEO Jaime Dimon who has been viewed as the one who got it right in the financial crisis, and has been a big opponent of more financial regulation. The trade involved the same derivatives that were involved in the collapse back in 2008, and is a reminder that with vast leverage and a betting mentality in the financial system, there are still risks to the system that have not been addressed.
Mortgage bonds traded in a range all week. Several time they hit approached their best points historically, before pulling back. Mortgage rates are at or near their best levels ever. What happens next will largely depend on the news out of Europe, but if you are looking to buy a new home or refinance your existing mortgage, the timing is great and mortgage rates are low.
These are the current Chicago Illinois Home mortgage rates for an A+ (740 Fico or above), full doc single family home purchase or rate/term refinance on a 45 day rate lock, with 0 points, and no origination fee, best FHA rates assume a 640 Fico score, but loans are available with credit scores as low as 580. Mortgage rates in other states may be slightly different, give me a call and I will give you an accurate quote for your particular situation. The conventional and FHA rates are based on the highest conforming loan amounts, which give the best pricing. Again, there are many factors which affect mortgage rates and your ability to be approved for a loan, including credit scores, property type, amount of down payment and a number of other factors. These rates may not fit your situation and this is just a sample of the programs that are out there. If you would like a quote for your personal situation, or to get pre-approved for a mortgage, give me a call or contact me (Illinois mortgage company) and I will take the time to find the rate and program that is best for you:
Conventional loans up to $417,000
| 30 year fixed rate | 3.875% | 4.063% APR |
| 15 Year fixed Rate | 3.25% | 3.359% APR |
| 5-1 A.R.M. | 2.875% | 3.067% APR |
| 7-1 ARM | 3.125% | 3.264% APR |
For Jumbo loans over $417,000
| 30 Year Fixed Rate* | 4.75% | 4.839% APR |
*(Another option is to break your Jumbo loan into 2 parts a conventional to the limit of $417,000 and a HELOC or fixed second mortgage for the rest. The blended rate is usually much better than a single loan would be.)
| 3–1 ARM Jumbo | 3.25% w/ 0 points | 3.367% |
| 5-1 ARM Jumbo | 3.375% w/ 0 points | 3.554% |
| 7-1 ARM Jumbo | 3.625% w/ 0 points | 3.758% |
| 5-5 A.R.M. ** | 3.875% w/ .5 points | 3.987%** APR |
| 5-5 A.R.M. ** | 3.625% w/ 1 Point | 3.768% APR |
** 5-5 ARM is fixed for first 5 years, with 2/6 caps it can’t go more than 2% above the start rate for the next 5 years. 2% cap for next 5 years – so a blended rate over 10 years is no more than 1% over the start rate. Super Jumbos available.
FHA LOANS 3.5% down payment FHA Maximum varies by County
| FHA 30 year fixed | 4.00% with 0Pt | 4.645% APR |
| FHA 30 year fixed | 3.75% with 1.0 Pts | 4.679% APR |
| FHA 5-1 ARM | 3.625% with 0Pt | 3.996% APR |
| FHA 5-1 ARM | 3.375% with 1 Pts | 4.137% APR |
FHA APR reflects 3.5% down payment and the effect of mortgage insurance on the loan. Call for information on no-cost FHA streamlined Refinances
FHA 203K Rehab Loans – Call for Current Quote – FHA 203k Rehab and Renovation loans are now available as 30 year fixed or 5-1 ARMs.
VA Veterans Administration 0 Down Loans
| VA 30 Year Fixed Rate | 4.00% with 0Pt Origination | 4.645% APR |
| VA 30 Year Fixed Rate | 3.875% with 1 Pts | 4.732% APR |
These are just a few of the mortgage programs and mortgage rates available. Which option is best for you depends on your own specific goals and needs. If you have any questions or want to go over your situation in depth, let me know how I can help.
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strengthening, and an increase in jobs means increasing optimism, and spending and becomes a virtuous circle. Over the last six months, there have been signs that not only has the worst of the downturn passed, but that we were starting to build a slow, but steady recovery. So far this year the economy has gained over 800,000 new jobs, much better than where we were at this time last year. But last month’s report was less than expected, and the numbers this month also disappointed. Expectations were for an increase of about 178,000 new jobs, but the real number (for now, there are always adjustments later) came in at 115,000. The big question now is whether the economy has lost steam and we are in danger of slipping back into recession, or if the numbers over the last few months which were so much better than expected were really weather related, and the gains came early because of the unseasonable warmth. In the same release, the unemployment rate dropped from 8.2% to 8.1%. This rate is figured through a different method, and though it sounds like good news, the rate dropped because of less participation in the survey, not more jobs. Mortgage bonds rallied on Friday, and are now back near their lowest levels. 
disappointing and gave more proof that the economy is not going to roar forward. At the same time, it doesn’t look like we are going to slip back into a recession, just a period of slow growth, that is not enough to pull the economy out of the ditch. The weekly initial unemployment claims came in at 386,000, slightly higher than the previous average. Both housing starts and existing home sales were down, but the inventory of homes for sale were down too, and it seems that home prices are stabilizing. On the positive side, retail sales came in at .8% above the previous month, and 6.5% above where they were a year ago. This is a good sign that consumers are feeling positive enough about the future that they are willing to spend money again.
there that this is too good to be true. In the back of our minds, we are all waiting for a frost or a late season snow storm. The view on the economy has been similar. After a brutal downturn, we see lots of signs of rebirth, but the feeling was that the optimism is a little too good to be true. The weather is holding, but recent signs show some frost in the economic world. Over the last few months, most of the economic reports have been coming in better than expected. More recently the reports are just hitting expectations, or coming in lower than expected. But the big storm front has been Europe, and the belief that they’d fixed their problems is now starting to fade. The focus is on Spain now, and as their bond yields rise, the risk of default looms. The big problem in Europe is that what is good for Spain (and all the other debtor countries), is not good for Germany, which was the biggest lender to the Euro market. So while Germany pushes for more belt tightening, the other economies push back, and demand looser credit and the chance to grow their way out of debt, even if this means inflation. The cold front in Europe increases the likelihood of frost here. 
meeting were released. The minutes confirmed what we already knew, that there is a difference of opinion among Fed members as to how strong this recovery is, and that the consensus for now is that a new round of Quantitative Easing (pumping more money into the economy) is off the table for now. In a way we live in 
ease pressure on 
the table, for now, and a temporary solution to the other European hot spots in place, the financial world has breathed a sigh of relief. The big news that set up the shift in rates was the news that the Fed is not about to start a new round of quantitative easing, which some were expecting. This policy, in effect bringing more money into circulation to force banks to lend is considered inflationary, which is usually bad news for bonds. But the expectation that something was on the horizon has kept a lot of investors in the belief that the Fed will do anything that they can to support these extremely low rates. With the announcement that this isn’t the plan for the immediate future, money rushed out of bonds and into stocks. The Catch 22 for the Fed is that the economy is still fragile and unemployment is still way too high. Chairman Bernanke and several other Fed members consider unemployment a bigger risk than inflation, but in order to pump more money into the economy, which should mean an improvement in employment, they need to see worse economic figures, and the general trend now is improving. As fear recedes, mortgage rates have blipped up slightly, but are still near all time lows. 
may shift to one of the other troubled European economies, this has been the biggest fear for most of the past year, so even a temporary solution that no one really believes will work is good news. The unemployment report released on Friday was more good news. The report showed an increase of 227,000 new jobs created in February, almost all of them in the private sector. This number was better than expected, and confirmation of the trend. The previous 2 months jobs were also revised higher. The unemployment rate, which is figured based on a different method, came in flat at 8.3%, but the experts expected that number would be higher as new life in the job market brought in more people off the sidelines who had not been actively looking before. This has still been a very slow recovery, but its hard to discount these numbers, and it looks like the jobs recovery is slowly gaining traction. Other economic indicators like the ISM non-manufacturing index (a measure of growth in the service sector) were also positive, more proof of an expanding economy. 
Spain missed some financial projections, and rather than bowing to the demands for more austerity, they insist they will fix things on their own. So for those of you who have gotten sick of hearing about Greece, the news may have a Spanish flavor for a while.