Illinois Mortgage Rates Weekly Update
4th July 2008
Welcome to Illinois Mortgage Rates and News week in review for the week ending July 4th, my take on the week’s financial news and how it affected Illinois mortgage rates.
First of all, happy 4th of July to everyone. Independence Day is one of my favorite holidays. This is when summer 
really kicks in. I like the parades, festivals, barbeques and fireworks. And this holiday is all about freedom, something we take for granted but it is good to be reminded of what we have, and what we could lose if we don’t pay attention. That being said here is the breakdown of what happened to affect mortgage rates this week.
The key data this week was all about jobs. The ADP national employment report released Wednesday showed a loss of 79,000 jobs, many of them in the service sector which had been the one area that had been holding up the best. The jobs report yesterday showed the 6th straight monthly decline with a loss of 60,000 jobs, right in line with expectations. It also showed a revision showing another 52,000 jobs lost over the previous 2 months. New claims for unemployment insurance moved up to 404,000 this week – the highest since the Katrina disaster. All these signs taken together show that the economy is muddling along at best. We may not officially be in a recession, but for most people it feels like one.
On the other side of the equation, oil prices moved up again closing at $146 per barrel. Gas prices at the pump here in Illinois (more specifically the Chicago area) are up past $4.00 per gallon. The news reports people are now driving less. It will take some time to see if the lower demand will be enough to drive prices lower. The European Bank hiked rates by a .25% on Friday to fight inflation, but the wording in their statement indicated this is probably going to be the only hike. German manufacturing was down sharply, so many analysts expect that the economy is slowing there, as it is here, and that on its own will bring inflation rates down.
The stock market finished its worst June since 1930. The Dow Jones decline has been just over 20%, the official mark of a Bear market. Losses from banks and big financial’s have led the way and the auto makers released awful sales reports this week and their stocks suffered. Even Starbucks, seemingly invincible, announced that they will be closing 600 of their lower producing stores. With these signs of the slowing economy, the sting of inflation is now looked at more as another factor crimping people’s spending than a reason we need to raise rates now. At least that’s the thinking for this week.
The mortgage bond market was holiday shortened and thinly traded this week. That doesn’t mean that the week wasn’t volatile. Mortgage bond prices moved up and down like a yo-yo this week as they tried without success to break through a key area of resistance. The week ended on a sour note with bonds worsening (rates moving higher) even as the jobs report showed softness. It is common for markets to sell off on long weekends as traders unwind positions beforehand.
Mortgage rates are just a little worse on the premium side than they were at the end of last week, but overall unchanged. We are still trading in a narrow pattern and mortgage rates are between 2 levels of resistance.
Here is what Illinois 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 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 6.375% 6.589% APR
15 year fixed rate 5.875% 6.124% APR
5-1 A.R.M. 5.625% 5.788% APR
7-1 A.R.M. 5.875% 5.989% APR
For Jumbo loans over $417,000
30 year fixed rate* 6.875% 6.997% APR – Requires 20% down payment
7-1 A.R.M.* 6.125% 6.327% APR *there is a 1 year pre-payment penalty on this option.
FHA LOANS – 3% down payment
With 1 point origination fee – 60 day lock
30 year fixed rate 6.125% 7.048% APR
With no origination fee – 60 day lock
30 year fixed rate 6.375% 7.056%
FHA APR reflects 3% down payment and the effect of mortgage insurance on the loan.
These are just a few of the 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. Thanks and have a great Holiday weekend.
Illinois Mortgage Rates and News
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credit were choking the system. Big banks and financial powerhouses were on the edge of failure and our whole economy was in the danger zone. The Fed moved decisively to inject credit into the financial markets and stem the panic. Wall Street breathed a sigh of relief, but the easier credit didn’t trickle down to the small business or home mortgage markets. On Main Street the stranglehold still seems pretty tight. The economy hasn’t been growing, but with the rate cuts and stimulus checks there have been some signs of activity. And now with gas and food prices spiking up, the worry has turned from the softness in the economy to the threat of inflation. Over the last few weeks mortgage rates headed higher as the financial community, in mass, called for higher rates to stop the inflationary spiral that was about to hit us. Last week it became official that the economy was on the road to recovery when former Fed Chairman Alan Greenspan announced that the credit crunch was over, or would be soon. This week a new message is coming through – not so fast, we might not be out of the woods yet.