The big news from last week came out of – you guessed it – Europe. On Friday, Standard and Poors, the same organization that down graded the US bonds (to no real effect) announced the lowering of credit ratings for the bonds of nine European countries, including the second largest economy, France. This wasn’t a total surprise. S&P had hinted that they would do this a few weeks back, and bond yields throughout the continent have steadily been moving higher. But once they made it official more money poured out of Europe and into the relative safety of US bonds, and as a side benefit, mortgage bonds. The European Union is meeting for more economic discussions in about two weeks, and we are likely to see more fireworks then. Greece, whose problems were the first to show up, is not dealing well with its forced austerity, and there is a split among the economic powers of how to deal with this. If they push too hard they are likely to give Greece (and others) reason to break away, but if they are too accommodating this encourages more problems. There are no easy solutions, and this could take a long time to unravel. If problems heat up, the flight to quality will mean a push toward lower rates here.

Over the last months the economic reports here in the US have been trending better. That wasn’t the case last week. Retail sales figures for the Christmas season were released last week, and they came in weaker than expected. Retail sales for December increased .01% over November, when expectations were for an increase of .04%. The Christmas shopping season is a measure of confidence, and this shows that consumers are still feeling strapped. Weekly unemployment claims moved up by 24,000, but this is a blip in a trendline which has been improving. On the good side, consumer sentiment increased from a reading of 69.9 up to 74.0. This is still a weak reading, but much better than expected.

Mortgage rates are hovering at all time lows, but its hard to see that we will go much lower from here. As part of the congressional agreement to extend unemployment benefits which passed at the end of the year, the cost of the extension is being made up with a surcharge to mortgage costs. This amounts to 25 basis points, which points to slightly higher mortgage costs (which is usually factored into the rate. Some lenders are putting it in all at once, others are gradually adding the cost in by a few basis points per day so it won’t seem so jolting. Refinances at this level are likely to pick up again, and mortgage lenders are likely to contol their pipelines by raising rates if they get more volume than they can handle. This is all a way of saying that rates are great, and they may not get a whole lot better unless something drastic happens in Europe. If you are buying a new home or looking to refinance and qualify under the current guidelines, there isn’t a lot of incentive to wait.

Here are the current Chicago 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, best FHA rates assume a 640 Fico score, but loans are available with credit scores as low as 580. Mortgage rates in other states may be slightly different, give me a call and I will give you an accurate quote for your particular situation. 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, including credit scores, property type, amount of down payment and a number of other factors. 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 will take the time to find the rate and program that is best for you:

Conventional loans up to $417,000

For Jumbo loans over $417,000

*(Another option is to break your Jumbo loan into 2 parts a 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.)

** 5-5 ARM is fixed for first 5 years, with 2/6 caps it can’t go more than 2% above the start rate for the next 5 years. 2% cap for next 5 years – so a blended rate over 10 years is no more than 1% over the start rate. Super Jumbos available.

FHA LOANS 3.5% down payment FHA Maximum varies by County

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

FHA 203K Rehab Loans – Call for Current Quote – FHA 203k Rehab and Renovation loans are now available as 30 year fixed or 5-1 ARMs.

VA Veterans Administration 0 Down Loans

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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