Rates and market update this week - Volatile is the market

This week  Mortgage Rates worsened as trading in the secondary mortgage market and beyond grew increasingly volatile.  Best-Execution offerings may be the same or slightly higher than last week, but if the rate remains the same, closing costs will likely have increased. Market volatility is a reaction to the situation in Europe and the impending summit this weekend. We have to expect the volatility to continue indefinitely. Treasuries bounced around higher and lower with 10-year notes ultimately closing down 6/33 in price to yield 2.18%. Mortgage Backed Security prices on 30-year current coupon 3.5 and 4.0 were flat to 1/8 point lower/worse.

The general market is -

BEST EXECUTION 30 YEAR FIXED -   3.99% - 4.250%
FHA/VA - More 3.875% today, 3.75% still out there for some.
15 YEAR FIXED -  Mostly 3.5%
5 YEAR ARMS -  low 3% range, huge variations from lender to lender.

The U.S. Senate voted Thursday to restore higher loan limits, approving, 60-38, an amendment to a federal spending bill that would raise the maximum size of loans that can be guaranteed by government-controlled mortgage companies Fannie Mae (FNMA) Freddie Mac (FMCC) and the Federal Housing Administration. The amendment was sponsored by Sen. Robert Menendez (D., N.J.), but things don't look so good for it in the Republican-controlled House, as many argue that the current reduced loan limits help scale back government support of the mortgage market.
NAR reported this week that Existing Home Sales dropped 3% in September from August but are still up about 11% versus a year ago. The median sales price was $165,400, down 3.5% from $171,400 a year earlier. The inventory of previously owned homes listed for sale, meanwhile, fell at the end of September to 3.48 million. That represented an 8.5-month supply. Foreclosures and other distressed properties represented about 30% of sales.
30 year fixed - 3.99% + 0 cost points for rate
20 year fixed - 3.875% + 0 points for rate
15 year fixed - 3.375% + .50 points for rate
10 year fixed - 3.250%  0 cost points for rate
5/1 ARM - 2.625% - 0 points for rate
7/1 ARM - 2.875%  + 0 points for rate

FHA/VA
30 year fixed - 3.875% with 0 points for rate
5/1 ARM - 3.00 with 0 points for rate
7/1 ARM - 3.25 with 0 point for rate

Jumbo - over 635,000 to 2,000,000
30 year fixed - 4.750 % with 0 points  for rate
15 year fixed - 4.250% with 0 points for rate
5/1 ARM - 3.375% - 0 points for rate
7/1 ARM - 3.50 % - 0 points for rate
10/1 ARM - 4.375% with 0 points for rate

The lowest rate in the wrong mortgage program will cost you real $$.

A first time homebuyer had done some online research and told me they wanted a CHFA mortgage with a 30 year fixed rate of 4.00%. They had excellent credit, income and enough cash to put down 20% on their home purchase. They wanted more cash on deposit after their purchase and they were putting down 10% with both loan programs.

Here are the options I gave them -

CHFA = 2,000 in points for the rate
PMI = 150.00 per month for 5 years minimum (= 9,000)(average is 10 years)

200,000 loan @ 4% = 954.83 + 150.00 = 1104.83 per month

10% down 30 year fixed
1 time MI payment (complete tax deduction) = 2,250

200,000 loan @ 4.375% = 998.57 per month


CHFA = 1104.03 x 5 years = 66,241.80
10% down = 998.57 x 5 years = 59,914.20

A real dollar savings to them of 6,300.60 over 5 years, and remember the 150.00 per month for the mortgage insurance did not pay down the principal of their loan - it is a direct benefit to the lender.

and over 30 years
CHFA = 361,739
Conventional = 359,485

This is the kind of long and short term planning that is necessary for the best debt program for your needs.