Consumer reaction to the recent rise in mortgage rates can be seen in the latest new home sales data released by the Census Bureau and Department of Housing and Urban Development. Sales dropped 13.4% to a seasonally adjusted annual rate of 394,000. June's rate was revised downward to 455,000 from 497,000. July's numbers were the lowest since October of 2012; however, they were 6.8% higher than at the same time last year.
According to the most recent survey of wholesale and direct lenders performed by FreeRateUpdate.com, current conforming 30 year fixed mortgage rates increased and are now as low as 4.000% (APR 4.270%); 15 year fixed mortgage interest rates are as low as 2.750% (APR 3.383%) and 5/1 adjustable mortgage rates are as low as 2.375% (APR 2.651%). Borrowers must have good credit in order to be offered low rates from lenders.
Mortgage applications dropped 4.6% on a seasonally adjusted basis for the week ending August 16th, according to the Mortgage Bankers Association Market Composite Index. However, the seasonally adjusted Purchase Index rose 1%, a sign that consumers are still purchasing homes even as rates have slightly increased. Refinance applications are down with the Refinance Index dropping 8%, a total 62.1% lower than the peak reached during the week of May 3, 2013.
Among refinance applications is the HARP refi which is for underwater homeowners who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009. HARP refinance loans, which are available until the end of 2015, have already helped 2.4 million homeowners as of March 2013. FHA 30 year fixed mortgage rates also increased and are now as low as 3.750% (APR 4.128%); FHA 15 year fixed rates are as low as 3.250% (APR 3.797%) and FHA 5/1 adjustable mortgage rates are as low as 2.625% (APR 2.899%).
Borrowers must remember that FHA closing costs (APR) are high because of the upfront mortgage insurance premium and other FHA fees. FHA recently updated their guidance for borrowers who have experienced serious financial conditions due to the economic recession. The situations, considered extenuating circumstances, will be taken into consideration as long as the borrower who is seeking FHA mortgage financing is now employed and paying their bills.
Those borrowers who meet these guidelines may be able to obtain FHA financing for the purchase of a home in as little as one year after a bankruptcy, foreclosure, deed-in-lieu or short sale. In addition, effective October 15th, guidelines will exclude consideration of all medical collections and charge off accounts. Any FHA approved lender will be able to assist with complete clarification of these two new rules.
In addition, existing FHA mortgage holders still have the opportunity until the end of 2013 to refinance with the FHA streamline in order to receive reduced upfront and annual mortgage premiums. Jumbo 30 year fixed mortgage rates are as low as 4.125% (APR 4.402%), jumbo 15 year fixed rates are as low as 3.250% (APR 3.586%) and jumbo 5/1 adjustable mortgage rates are as low as 2.500% (APR 2.617%). Jumbo rates continue to be exceptionally low and are available for borrowers who have maintained a history of excellent credit. The borrower will also have to meet the lenders guidelines for employment, income and assets in order to receive loan approval.
As overall mortgage rates have risen, jumbo loan rates have remained to be a bargain for the high end property buyer which has helped in the recovery of this sector of the housing market.
Mortgage rates are affected by MBS prices (mortgage backed securities) and move in the opposite direction. Speculation that the Feds will begin to taper QE3 in the fall of this year continues to drive markets. This continues to have an impact on mortgage rates which have both increased and decreased over the past week and continue to remain volatile.