Welcome to Illinois Mortgage Rates and News week in review for the week ending March 28th, my take on the week’s financial news and how it affected Illinois mortgage rates.

There is a certain kind of action movie where the hero (heroine?) moves from one disaster to another, each time escaping just in the knick of time, but only momentarily before falling into even worse peril. That’s what the mortgage market has been like over the last 6 or 8 months, edge of the seat excitement and cliffhangers galore. Since the Sub Prime bubble popped, it’s been week after week of fear and excitement, companies imploding, mortgage programs eliminated, rate cuts and the mortgage rates moving up and down so fast it is hard to keep track. Compared to what has been going on, this week was uneventful and almost boring by contrast. Does this mean the markets are starting to calm down and get back to normal? Or is this just the calm before the next, bigger storm?

First, an update on the big news from last week. Bear Stearns, which was forced into a shotgun wedding with JP Morgan Chase as it was about to implode, ended up this week with a 500% increase as shareholders negotiated for a few extra bucks from their liquidation pricing. This is still an incredible loss of value in a short period of. There is still a question if there are other big players out there on the verge of falling, but for now things have quieted down.

The economic indicators were a bit mixed, but generally showed that the economy is still slowing down and inflation is in control. Durable goods, a measure of strength in manufacturing, was down 1.7% for the month, much worse than expected. Consumer confidence fell to 64.5, also much lower than expected and the lowest level in over 35 years. On the other hand, jobless claims came in slightly better than expected, 366,000 as compared to 371,000 anticipated. This is still a number that is consistent with our being in a recession. Consumer spending was flat, home sales improved, though they are still down, and inflation came in with in the range of Fed expectations. All this taken together suggests that the economy is either in a recession or a major slow down, and that the Fed will continue to cut rates.

Conventional mortgages are still tightening. As of the end of the month, mortgage insurance companies will no longer insure 100% purchases. Fanny Mae and Freddie Mac responded to this by altering their guidelines on the few 1005 financing programs they still offered, including DreaMaker, MyCommunity Mortgage, and Home Possible, all of which are programs targeted toward low and moderate income borrowers. These programs are still available, but they now require at least a 3% down payment. FHA guidelines even targeted a little. All the major lenders are now requiring a minimum credit score of 580 to qualify – still amazing in this market. It is now clear that FHA mortgages are going to be the best option for many borrowers here in the Chicago area, even those who could qualify for a conventional mortgage.

So how did all this activity affect mortgage rates? Over all, not that much. Rates were still volatile and worse off for most of the week. But on Friday, after the release of the inflation numbers, mortgage bonds went on a tear, finishing at their best level for the week. Rates are still slightly higher than they were last week, but not by much and the trend (for what that is worth) is for the better. We are going back and forth between a floor and a ceiling of resistance. Over the last few weeks, every time that it looked like rates were going to go much lower, they hit the resistance and bounced the other way. I think we will test this level again this week. If mortgage bonds break through it, mortgage rates should improve markedly. And this could happen any day. Or not. If you are thinking of refinancing your mortgage, be sure and get your documentation into your mortgage lender (or contact me, I welcome the business). Rates have been all over the board and there is no guarantee that if they drop lower, they will stay low.

As I’ve mentioned before, one of the bright spots for buyers, especially those with low down payments, is FHA. FHA, a government insured program, recently increased their lending limits. Here in the Chicago area the new lending limit for a single family home is now $410,000. With FHA there is no hit to the pricing for credit scores and you can buy with a low or in some cases no down payment. FHA is a great alternative for home buyers here in the Chicago area, even those who could go conventional.

Here is what Illinois mortgage rates look like today for an A+, full doc purchase on a 30 day rate lock, with 0 points, and no origination fee.  The conventional loans 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. 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 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    5.75%      5.832% APR

15 year fixed rate    5.25%      5.337% APR

5-1 A.R.M.               5.50%      5.659% APR      

7-1 A.R.M.               5.75%      5.879% APR

For Jumbo loans over $417,000

30 year fixed rate*  7.125%     7.262% APR

(*We have one lender at 6.125% for a Jumbo fixed rate – if you meet their guidelines.)

7-1 A.R.M.              6.00%       6.174% APR

FHA LOANS up to $410,000 with 1 point origination fee

30 year fixed rate  5.625%       5.897% APR

These are just a sampling of the mortgage rates available. We have special programs for first time home buyers and all the bond programs including the City of Chicago Bond program which offers no down payment and below market pricing.

Illinois Mortgage Rates and News

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