Welcome to Illinois Mortgage Rates and News week in review for the week ending October 4th, my take on the week’s financial news and how it affected Illinois mortgage rates.

The financial news this week all revolved around the fate of the financial bailout bill. The markets were thrown for a loop on Monday when the bill was rejected by the House of Representatives. The vote was expected to be close, but both parties claimed they had the votes locked in over the weekend. The stock market reacted by diving nearly 800 points after the deal fell through. The rest of the week the markets nervously treaded water waiting for some kind of plan to come together. The bill went from the 3 page Paulson proposal to a 110 page House bill, to a 400 plus page, pork sandwich which the Senate passed. The House followed through on Friday and passed the Senate bill, saving face by claiming the new bill was an improvement over what they had to work with before. The markets, which were trading back and forth in a tight range throughout the week, didn’t greet the news as expected. The stock market went from a huge gain back to flat after the announcement, and mortgage bonds improved slightly after being down most of the day, but again mostly flat.

The anticipation was that there was a lot of money sitting on the sidelines, just waiting for the signal to move in. If you are a baseball fan, what’s happening in the financial markets is all too similar to what is happening with the Chicago Cubs playoff hopes. Great anticipation for moving forward, and then nothing. I’m still hoping that the Cubs will pull out a couple of road victories and bring it back to Chicago where they will win a dramatic fifth game at Wrigley Field. But I’m not feeling as confident as I was going into this. The same may be happening with the bailout plan. Investors may be taking a wait and see attitude before committing to any action.

The $700 billion dollars is not enough to fix the economy on its own. The idea behind the plan is that we are having a crisis in the credit markets because the of the toxic mortgages in the system and the fact that no one knows exactly who has what and how much risk is involved. The bailout plan won’t get rid of all the toxic mortgages and it won’t be enough to recapitalize the big banks and financial companies. This is the financial equivalent of the placebo affect. In blind studies new medicines are always compared against placebos, sugar pills, and the medicine is effective if it performs better than the placebo. If people believe they are taking a medicine that will help cure their condition, their bodies respond positively, even if they aren’t getting real medicine. If global investors have faith that this plan will help, and it eases the fear and allows companies to loosen their wallets and start lending again it will be a success. We will see how it works out over the next few weeks.

The economic news released this week all pointed to a slowing economy. New auto sales came in 26% below last year. The ISM manufacturing index came in at 43.5, which is more proof we are in a recession. The Friday release of unemployment numbers showed a loss of 159,000 jobs in September the 9^th straight month of losing jobs.

In spite of all the news about the credit crunch, there is still plenty of mortgage money available. I got several calls over the week from people wondering if mortgages were being cut off, and the answer is no, if anything mortgage money is more available than it was a few weeks ago. Most of the loans we are doing now are either conventional or FHA loans. The conventional loans are loans that are able to be sold to Fannie Mae and Freddie Mac, which were both taken over by the federal government a few weeks back. FHA is a government program. When the government is the bank or stands behind the bank, it means that mortgage money will continue to be available, and the government is going to do everything they can to get the housing market stabilized and moving again.

Here is what Illinois Home 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 Illinois mortgage company 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%      6.136% APR

15 year fixed rate 5.75%      5.819% APR

5-1 A.R.M.            5.875%     6.176% APR

For Jumbo loans over $417,000

30 year fixed rate *6.50%     6.615% APR Special pricing requires 25% down payment or equity

7-1 A.R.M.             6.125%    6.344% APR

FHA LOANS - 3% down payment

With 1 point origination fee – 60 day lock

30 year fixed rate 5.875%    6.524% APR

With no origination fee – 60 day lock

30 year fixed rate 6.00%    6.486% APR

FHA APR reflects 3% down payment and the effect of mortgage insurance on the loan.

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.

There is sure to be more activity in the credit markets over the week, and I expect volatility to ramp up.

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