Mortgage rates improved last week as the the Fed announced that interest rates will remain “exceptionally low” through late 2014. The Fed does not control mortgage rates. What they do control is the short term rates, the Fed Funds rate and the Discount Rate, which the big banks can borrow at. The Fed has kept rates at a range of 0 – .25%, but effectively 0%. The Fed has a dual mandate, to keep inflation under control, and to encourage employment. With rates this low, inflation hawks have been screaming that we are bound to have high inflation soon. By their statement this week, the Fed is saying this isn’t the biggest concern now. The Fed is saying that the economy remains weak, and the threat of falling back into a recession is a bigger concern. Part of this is obviously what is happening domestically, and trying to give a shot to the housing market. But a big part of this is also a reaction to what is happening in Europe, and trying to inoculate the economy here from slipping further if Europe deteriorates further. Three years is a long time, and knowing that rates will remain low for this period gives investors and businesses confidence in planning. Again, the Fed doesn’t control mortgage rates, these are set by action in the Mortgage Backed Securities (MBS) markets. But the signal here is that mortgage rates are expected to remain in a low range for quite some time.
As usual, Europe is still a big concern, and Greece is again the focus. The end game for a Greek debt plan is fast approaching, and may occur this week. Germany tried to push through a measure which would allow the ECU to take control of how Greece taxed and spent money, which understandably didn’t go over well with the Greek government or people. Without those controls, there is nothing backing the debt obligations, but it is hard to imagine any sovereign nation giving up that power. The results of the Greek debt talks will either come to an agreement, which in effect will kick the can down the road a little further as no one really expects that they will be able to live up to the terms of the agreement, or will break down, causing new concerns. Regardless of what happens, there are other countries lined up with similar issues which will need to be addressed. The question is whether the problem can be solved at all through forced austerity, or whether they will need to do something to force more growth (which means more inflation).
The reports released here were within the range, but a little less optimistic than what has come out over the last few months. GDP came in a little softer than expected, and inventory build up was a big part of the number. If this inventory isn’t absorbed by the end users, we could see more contraction in the coming months. Unemployment claims also came in a little higher last week, bucking the trend of late. This week could be a blip, but over the last months the trend has been that the economy has steadily improved, though is still too slow to make a real dent in the employment picture. In his State of the Union speech, President Obama talked about a new program that would help any homeowner who is currently paying their mortgage. This is different than the expansion of the HARP refinance program which will kick in im March, and no one knows if this will ever materialize, or what the details will be. If you are in the market to buy a new home, or refinance your current mortgage, mortgage rates are at all time lows. These low rates mean that home buyers can afford more of a home payment than they could when rates were higher, and current home owners have the potential to save a lot.
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
| 30 year fixed rate |
3.875% |
4.067% APR |
| 15 Year fixed Rate |
3.25% |
3.467% APR |
| 5-1 A.R.M. |
2.875% |
2.967% APR |
| 7-1 ARM |
3.00% |
3.146% APR |
For Jumbo loans over $417,000
| 30 Year Fixed Rate* |
4.625% |
4.793% APR |
*(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.)
| 3–1 ARM Jumbo |
2.875% w/ 0 points |
3.068% |
| 5-1 ARM Jumbo |
3.25% w/ 0 points |
3.347% |
| 7-1 ARM Jumbo |
3.625% w/ 0 points |
3.773% |
| 5-5 A.R.M. ** |
3.875% w/ .5 points |
3.987%** APR |
| 5-5 A.R.M. ** |
3.625% w/ 1 Point |
3.768% APR |
** 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 30 year fixed |
4.00% with 0Pt |
4.676% APR |
| FHA 30 year fixed |
3.875% with 1.0 Pts |
4.885% APR |
| FHA 5-1 ARM |
3.625% with 0Pt |
4.079% APR |
| FHA 5-1 ARM |
3.375% with 1 Pts |
4.146% 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
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
| VA 30 Year Fixed Rate |
3.875% with 1Pt Origination |
4.638% APR |
| VA 30 Year Fixed Rate |
4.00% with 0 Pts |
4.724% APR |
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.
You can trust in us to get the job done.
Peter Thompson 630-479-6424
Illinois Mortgage Rates First time home buyer loans
Chicago Mortgage Company Chicago FHA Mortgages
