Welcome to Illinois Mortgage Rates and News week in review for the week ending July 9th, 2009, my take on the week’s financial news and how it affected Illinois mortgage rates.

Strike up the band, happy days are here again. Well, maybe not. The economy isn’t improving, in fact the consensus is coming back to the view that the economy is still stagnant. But as I’ve said many a time here, bad news in the economy is good news for mortgage rates. Mortgage rates have nearly come full circle and we are at the outer edges of the low range we were in before the bond market tanked last month with the view that the worst was over for the economy and an impressive rebound was on the horizon. The view is still that we’ve seen the worst of the downturn, but the new reality is that there isn’t going to be much of a bounce any time soon. And that means lower rates are back in the picture. This means another opportunity for those who missed out on the low rates before. I’m now seeing more home buyers lock into their rates, and a pick up in refinances again.

Mortgage rates have been heading back down over the last few weeks, but the news this week kicked that trend into overdrive. The University of Michigan consumer sentiment survey fell sharply this week from 70.8 to 64.6. If consumers are feeling pessimistic, this means they won’t be in the mood to buy, and with consumer spending the biggest driver in the economy that’s not good news. Confirming this trend, retail sales were down 4.9% in June. But the biggest factor in rates moving lower was the good results on Wednesday from the 10 year Treasury Bond auction. With all the new government spending, both now and in the future, as a result of the stimulus plan, the mortgage bond purchasing program and a whole new round of spending, the government has had to raise money through issuing new debt. New debt is always a worry because it has to be paid off at some time. The concern has been that this run up in debt will cause the dollar to fall further and inflation to heat up. This auction was more important than others because the 10 year note is the closest approximation to a 30 year mortgage, and a good gauge of long term rates. The auction went way better than expected. The yield dropped from last month’s 4.0% to 3.30%. This means that bond investors are now expecting that long term rates are likely to remain low. Mortgage backed securities (which mortgage rates are priced off of) rallied, and mortgage rates fell. At the same time, oil rates fell on the world market this week, meaning less inflation. Mortgage rates have improved this week, but what happens next depends on what happens in the stock market. If the stock market falls there will be a flight to quality (bonds) and mortgage rates will fall back to their lows.

We are in the middle of Summer, but if you are a first time home buyer, you need to know that the seasons are changing and Winter will be here before you know it. The $8,000 first time home buyer’s tax credit expires after November 31^st of this year, so 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. This is especially true if you are looking at foreclosure and short sale properties which can take more time to close. The clock is ticking. If you are thinking of buying this year, make sure you get your Chicago mortgage pre-approval so you are ready and able to meet the deadline.

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              5.125%     5.276% APR

15 Year fixed Rate             4.625%      4.744% APR

5-1 A.R.M.                         4.25%        4.328% 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              5.00%      5.579% APR

With no origination fee – 45 day lock

30 year fixed rate              5.25%      5.568% 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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