Welcome to Illinois Mortgage Rates and News week in review for the week ending August 28th, 2009, my take on the week’s financial news and how it affected Chicago Illinois mortgage rates.

The end of August is traditionally one of the slowest times of the year in the real estate market. Kids are going back to school, some are taking end of the Summer vacations and for those working, the pace is just a little slower than usual. In the mortgage market purchase business is hotter than usual, but rates are stable, almost exactly the same at the end of this week as they were last week.

The reports released this week were mostly encouraging. Case Schiller housing report shows that home prices are stabilizing. Home prices were up 1.4% on a month to month basis, and though they were still down over 16% from the year before, this was still a big improvement from where it was earlier in the year. The Chicago market is off a little more than the national average, 16.7% for the year. Durable goods orders came in stronger than expected, but most of this was a result of some big orders of Aircraft for Boeing, not a broad increase in economic activity. Consumer confidence bumped higher, too. This measure is closely watched because when consumers feel better about their prospects for the economy, they are more likely to spend, and consumer spending is the engine that drives the economy. Consumers are feeling better short term, but it’s doubtful that this will translate to increased spending any time soon. The survey also said that they were concerned about their jobs and worried about inflation. With household wealth down so much over the last 2 years, consumers are saving at the highest rate in decades, and they aren’t in position to lead the recovery. Next week the monthly unemployment report is released, so expect a more volatile week for mortgage rates next week.

The big news this week was that Fed Chairmen Ben Bernanke was reappointed for another term. His term wasn’t up until January, so the early reappointment sends a message to the markets that continuity is more important than ideology. Most economists credit Bernanke with playing the biggest role in saving the economy from a much deeper recession, and possibly a replay of the great depression. His moves to increase liquidity in the banking system kept the economy from crashing, but the hardest part may lie ahead as he will have to take the liquidity away before the economy heats up too. This will be a balancing act as he needs to act before the economy is fully recovered, and unemployment is still high. If he acts too late we could get hit with a wave of inflation which could be nearly as devastating as what we have been through. This means higher rates some time down the road. Don’t expect this any time soon, though. With foreclosures and unemployment still high, the recovery has to take hold first. Bernanke’s reappointment has to be ratified by the Senate, but that is almost a sure thing.

Bernanke’s unprecedented moves to save the market have led to some unintended consequences. One thing that will have a big impact going forward is that the biggest banks have gotten bigger. The trend over the last 10 years has been for bigger and bigger banks as the few financial giants consolidated their positions by aquiring and merging with competitors. This trend resulted in a handful of banks that were responsible for the majority of financial transactions in the country. Last Fall when the financial system imploded, these banks were at the center of the storm. They were all neck deep in bad mortgage debt and it looked certain that at least one of them would topple. It was quickly determined that these banks were too big to fail, and Bernanke led the move to rescue these banks by flooding them with new capitol. Now, four banks, JP Morgan Chase, Bank of America, Wells Fargo and Citigroup, have increased their market share and are now bigger than they were before. These four banks now are responsible for two thirds of the credit cards and over half of all mortgages issued. This situation hurts competition, and puts the economy at further risk with so much power controlled by so few banks, but once the genie is out of the bottle, how do you stuff it back in?

The real estate market is humming along and I expect that September will be a big month for home purchases. Most of the activity is from first time home buyers, and the big motivations are the lowest home prices in years, low mortgage rates and the $8,000 first time home buyer tax credit. The tax credit is pushing people to act now. The buyers who are in the market now, have a need, but without the credit they may have pushed the home purchase of a little longer. The November 30^th deadline is approaching quickly though, and there is now a sense of urgency that wasn’t there a month ago. There is still plenty of time, but it is less every day. Delays are all too common in any real estate transaction, and you want to make sure you do everything under your control to get your purchase closed on time. For the first step in buying a new home, call me for your Chicago mortgage pre-approval so you are ready and able to meet the deadline.

So how did all this good news affect mortgage rates this week? 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%        5.382% APR

15 Year fixed Rate             4. 625%         4.739% APR

5-1 A.R.M.                         4.25%        4.342% APR

For Jumbo loans over $417,000

***************** SPECIAL JUMBO PRICING ****************

30 Year Fixed Rate*          5.875%        6.093%*

This 30 year fixed Jumbo is special pricing based on a purchase up to 75% LTV or a refinance to 70%, 680 or better Fico scores. Other restrictions may apply.

**************************************************************

7-1 A.R.M.                        5.50%         5.637% APR

(Another option is to break your Jumbo loan into 2 parts – conventional to the limit of $417,000 and a HELOC or fixed second mortgage for the rest. The blended rate is usually much better than a single loan would be.)

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%       5.522% APR

With no origination fee – 45 day lock

30 year fixed rate              5.25%      5.529% 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

Call for quotes on FHA 203K Rehab Loans

VA Veterans Administration 0 Down Loans

With 1 point origination fee – 45 day lock

30 Year Fixed Rate            5.00%       5.247%

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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