Real Estate Toronto Canada

The flavor of the week last week in the mortgage market was recovery. Signs of an uptick in the economy helped the stock market regain some steam, and caused mortgage bonds to drop from their all time best levels. Mortgage rates are still in the best range they have ever been, but with optimism in the air (ban news is good news for mortgage rates) mortgage rates are likely to be under pressure. The reason for this optimism boils down to a few reports released last week. The ISM (Institute for Supply Management) Purchasing Managers Index showed some growth in manufacturing for the past month, beating expectations. The bigger news though, was the release of the jobs report which showed a loss of 54,000 jobs for the previous month and an increase in the unemployment rate from 9.5% to 9.6%. This was spun into good news that 114,000 of those jobs lost were temporary government hired census workers, and private enterprise payrolls increased by 67,000 in August. 

A lot of this comes down to perspective. While any increase in private employment is good news, I’m not sure this is reason to celebrate yet. The overall report was still pretty grim. It takes about 125,000 new jobs each month just to keep up with new entrants to the job market, so we are still getting pushed back on the treadmill even as we see some progress. The bigger concern is the breakdown of those who are unemployed. The number of long term unemployed is at its highest point. 46% of those who are unemployed have been out of work for 6 months or longer. Economists are now saying that if we do get a recovery, there will still be a high level of unemployment for years to come. With government spending trending down, and banks still holding back on business lending, any recovery will be slow and hard fought. Markets arte fickle, and the good news today may be looked at differently tomorrow. We are still in a range and I think it is likely we will stay in this range. With refinancing activity high and pipelines full, mortgage lenders are slow to show improvements when the market is pointing toward lower rates, and quick to move higher at any sign that rates may move higher.

The effect of all this on mortgage rates this week is that mortgage rates are still near their best rates ever, but volatility is high and rates are as likely to worsen as go lower. Even as mortgage bonds have improved, mortgage rates haven’t. On days that mortgage backed securities have a good day, the wholesale lenders hold their rates or improve just a little. When mortgage bonds have a bad day, the wholesale lenders jump at the chance to raise rates (or more likely the pricing which determines the rates). Some of this is due to a normal cautious nervousness when rates are at previously uncharted highs. Part of this is because all the lenders pipelines are full, and they aren’t as hungry for new business when they are near capacity now. As some of the loans close, and more room is available, we may see some improvements, but for those waiting for the next leg lower in rates, it may be a long wait. There is a lot of activity this week, including the most watched indicator the employment report which will be released Friday morning.

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 Quote

VA Veterans Administration 0 Down Loans

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.

Peter Thompson 630-479-6424

Illinois Mortgage Rates                   First time home buyer loans

Chicago Mortgage Company