Illinois Mortgage Rates and News

It’s time again for the Illinois Mortgage Rates and News week in review, my take on the week’s financial news and how it affected Illinois mortgage rates. We are still in a bi-polar market with no consensus on whether our biggest problem is a rise in inflation or the fear of a coming recession. The big news this week showed how world events can move the mortgage market. Add in the Christmas vacation slowdown and it was another roller coaster week in the mortgage backed securities arena.

It is Holiday time and most of the bond traders took the week off. That meant the markets were thinly traded. On weeks like this a small volume of buying and selling can move the markets in a big way. The week started out following the trend from last week with mortgage bonds falling and interest rates moving higher. The expectation was that the week would be quiet and it appeared that the bearish trend in interest rates would stay in place.

Then disaster struck in Pakistan with the assassination of Benazir Bhutto the former Prime Minister and chief opposition to the Government. The chaos in Pakistan is bad news on a global level. Pakistan figures big in U.S. foreign policy because it neighbors Afghanistan, has a large contingent of Muslim fundamentalists and is a nuclear power. The thought of more unrest here sends shivers through the global investment community. Remember, bad news is good news for mortgage bonds. Stocks dived on the news and money rushed into the more stable bonds and mortgage backed securities benefited.

The economic news that came out Thursday also helped to improve interest rates. Durable goods orders came in much lower than expected, and jobless claims rose more than anticipated. Both of these indicators are signs that the economy is slowing down, and that the odds of a recession are higher. This increases the chance that the Fed will lower interest rates again at their next meeting in January.

The trend improved more today with the news that new home sales were down 9% to a 12 year low. This is actually good news for the real estate market. It will be hard for home prices to recover if builders continue to add new inventory. There were some other indicators which showed more of a mixed look on the economy - The Chicago Purchasing Manager’s Index rose higher than expected - but the dominant news in the thin market was bullish again and rates ended the week marginally better for the week.

The other big news in the real estate market was the release of the Case Schiller Home Prices Index . This shows the state of home prices throughout the country. Some areas showed double digit decreases in prices and the composite number was a decrease of 6.7% over all. The Chicago area fared much better with the decrease in value here a relatively modest 3.2%.

So this week the rates went from up to down, and ended up just about where they were at the end of last week . Again, looking at these rates is just a snapshot of where they ended up. There was a big swing from the highest point of the week to where we ended up at the lowest point. When you are shopping for a loan you need to be aware that rates can change quickly, and a rate quoted in the morning may have changed by that afternoon.

Here is what Illinois mortgage rates look like as of the end of today for an A+, full doc purchase on a 30 day rate lock with 0 points, and no origination fee.  (Again, there are dozens of factors which affect mortgage rates and your ability to be approved for a loan. 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 you personally, give me a call and I’ll take the time to find the rate and program that is best for you.):

Conventional loans up to $417,000

30 year fixed rate    6.00%      6.183% APR

15 year fixed rate    5.375%    5.494% APR

5-1 A.R.M.               5.75%      5.839% APR         

7-1 A.R.M.               5.875%     6.483% APR

For Jumbo loans over $417,000

30 year fixed rate    6.875%     6.904% APR

7-1 A.R.M.               6.125%     6.229% APR

FHA LOANS up to $270,200 with 1 point origination fee

30 year fixed rate    5.75%    6.043% APR

Next week is another short week and this too could be a thinly traded market with exaggerated ups and downs. There are a number of economic reports coming out next week, but the big release will be on Friday when the employment numbers come out. How this comes out will tell a lot about what to expect at the next Fed meeting, so this should be another wild week.

Illinois Mortgage Rates and News.

Peter Thompson is illinois Mortgage Broker



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