Welcome to Illinois Mortgage Rates and News week in review for the week ending June 6th, my take on the week’s financial news and how it affected Illinois mortgage rates.

The Dow tumbles 400 points. Oil surges to a new record high of $139 per barrel. The unemployment rate spikes by .5% to 5.5%. The US dollar tumbles on world markets. Mortgage defaults reported at the highest level since 1979. Sounds like a bad week. Make that a bad day. A really bad day. Over the last months, the economy has been dealing with the twin dangers of recession and inflation. In the last few weeks it looked like the economy was growing slowly enough that we might avoid the recession, but it’s looking more and more likely that we may be lucky enough to get both at the same time.

The markets, both stock and bond, have been in panic mode for quite a while. Last week it was panic that the high oil prices were going to send us into an inflationary spiral. This week oil prices are higher and inflation is just as much of a problem, but now the soft economy gives more of a reason to panic. In one way this could be looked at as good news (in a very warped way). The biggest danger of inflation is the perception that the cost of everything will rise eroding the value of money. The key to an inflationary spiral is that wages keep going up as well as the cost of goods and services. The slowdown in employment now means we are not going to have the wage pressures that make inflation such a toxic mix. The high oil prices put the squeeze on consumers, and as consumer confidence goes down that means they are less likely to go out and buy anything they don’t absolutely need. In the past when we’ve had big spikes in gas prices it was enough to tip the economy into a recession. The slow economy over time brings inflation back down. I wonder how much longer oil prices will continue to climb, too. If this is part of a speculative bubble, which many experts think is the case, prices can come back down as quickly as they shot up.

The affect of all this news on mortgage rates was mixed. After falling out of their range last week, mortgage bonds are at a cross road as they struggle to find a new direction. There were a couple of days where rates got much worse, but the week ended with mortgage bonds rallying, ending the week a little worse than they started. The question is what happens next. Volatility is still crazy and there is no clear trend established. In a market like this it makes sense to lock in your rate at application.

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    6.25%   6.364% APR

15 year fixed rate    5.875%   5.952% APR

5-1 A.R.M.               5.375%   5.568% APR      

7-1 A.R.M.               5.75%     5.899% APR

For Jumbo loans over $417,000

30 year fixed rate*   6.75%     6.877% APR – Requires 20% down payment

7-1 A.R.M.*              5.875%   6.115% APR *there is a 1 year pre-payment penalty on this option.

FHA LOANS

With 1 point origination fee – 60 day lock

30 year fixed rate   6.25%     6.587% APR

With no origination fee –        60 day lock

30 year fixed rate   6.50%     6.788%

These are just a few of the 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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