Illinois Mortgage Rates Weekly Update
27th June 2009
Welcome to Illinois Mortgage Rates and News week in review for the week ending June 26th, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates.
If you are a regular reader of this blog, you may have noticed that I’ve missed the last two market updates. I took a much needed vacation and for the first time in 
years was almost completely cut off from the news of the economy and world events. So the past week has been spent catching up, both at work and with the news of the day. In a way, not that much has changed since I left. The markets are still bouncing around and the economy is showing some rays of sun amid the gloom. The biggest change is with mortgage rates. When I left rates had risen to their highest point in the last six months as investors speculated that the economy was over the worst and poised for a dramatic recovery. We may be over the worst of the crisis, but the odds of a dramatic upturn are fading fast, and investor sentiment is turning from euphoric to cautious. Inflation is the biggest enemy of bond yields, and as the risk of inflation spiking soon disappears (with unemployment still rising inflation can’t take hold), mortgage rates are improving. Mortgage rates have already recovered about half the losses of the last month.
This week the World Bank downgraded the growth estimate for the global economy and expects the economy to shrink by 2.9% for the year and called the global economy unusually uncertain. The announcement from Fed meeting on Tuesday and Wednesday, the most anticipated release of the week, maintained the same bias they had before. While the wording was slightly changed from their previous release, they maintain their emphasis on keeping rates low to help the housing market, and discounted the risk of inflation while stating they are prepared to fight inflation if the situation changes. CPI and PPI release showed that inflation levels are tame and not a threat any time soon. The biggest game changer may have been the release of initial jobless claims. The Labor Department reported that 627,000 people filed for benefits this past week, making this the 21st consecutive week where jobless claims were above 600,000. There won’t be a substantial recovery until the employment rebounds, and this shows we are still a ways from stabilization. Not surprisingly, this who are employed are saving more instead of spending. The American savings rate hit a 16 year high this week. This all contributed to the move lower for mortgage rates, and if this trend holds, we should see some more improvement over the next few weeks.
In other mortgage related news, HUD released a new mortgagee letter last week regarding FHA condo approvals. FHA has been the best option for most condo buyers with down payments of 10% or less, but even with the FHA spot condo approval process a lot of properties have been ineligible for FHA financing. This new program will open up the process and allow a lot of previously excluded properties to now offer FHA financing. It doesn’t go into effect until October 1st, but this should be a great and needed boost for the condo market. I will write more about this in the next few days.
The purchase market is still alive and well as a result of low prices, still affordable mortgage rates and the $8,000 first time home buyer’s tax credit. The tax credit is a big incentive to buy now, and it only applies for those purchases that close before December 1st of this year. If you are in the market for a home and fit the criteria for the credit, make sure you allow enough time to buy and close before the expiration date. The clock is ticking. Here are the current 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. 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. 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 5.25% 5.397% APR
15 Year fixed Rate 4.75% 4.848% APR
5-1 A.R.M. 4.50% 4.672% APR
For Jumbo loans over $417,000
30 Year Fixed Rate* 6.75% 6.897%
7-1 A.R.M. 5.375% 5.453% APR
(For smaller Jumbo loans another option is to break your loan into 2 parts – conventional to the limit and a HELOC or second mortgage for the rest.)
FHA LOANS – 3.5% down payment – FHA Maximum varies by County
With 1 point origination fee – 45 day lock
30 year fixed rate 5.25% 5.879% APR
With no origination fee – 45 day lock
30 year fixed rate 5.50% 5.863% 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
VA Veterans Administration 0 Down Loans
With 1 point origination fee – 45 day lock
30 Year Fixed Rate 5.00% 5.248%
Call for information on no-cost VA Streamlined Refinances
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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