Here is a brief report on current mortgage rates from Gil Mora and Julian Hebron of Residential Pacific Mortgage.
Rates open the first full week of the year about the same as they were leading into the holidays. A good 30yr fixed rate target for loans up to $417k is 5% or below, and the target for loans up to $625k is around 5.25%. For loans up to $417k and $625k, we’re close to those targets. Rates for loans from $625k to $1m are mid-6% range.
But how do you know when to lock? And when you do lock, can you even get your deal closed before incurring lock extension fees? The solution here is to apply for your loan, provide all your documentation to get your loan completely approved. Then all you have to do is lock when the market is right and close.
The Fed announced just before New Year’s that they’ve hired outside money managers to run their $500 billion mortgage bond purchase program and that it will start in January. We’ll likely see another update on timing this week. When that purchasing starts, it will drive bond prices up and rates down. That’s when you need to be ready to lock. But if you lock then try to get approved and closed, it’s going to be a nightmare. Get approved now—not verbal approval, actual approval, ready for docs.
The biggest news this week is Friday’s jobs report for December, which calls for 475,00 lost jobs and unemployment going from 6.7% to 7%. And this doesn’t even include post-holiday retail worker layoffs that won’t be captured until next month. It would mark 12 straight months of job losses and about 2.5m jobs lost for 2008. This news can cause rates to drop as investors dump stocks and buy bonds.
Conforming ($200,000 – $417,000) – NO POINTS
30 Year: 5.0% (5.11% APR)
15 Year: 4.875% (4.99% APR)
5/1 ARM: 6.375% (6.49% APR)
Super-Conforming ($417,001 to $625,500 cap by county) – NO POINTS
30 Year: 5.5% (5.61% APR)
Jumbo ($625,500 – $1,000,000) – NO POINTS
30 Year: 6.65 % (6.76% APR)
10/1 ARM: 6.35% (6.46% APR)
7/1 ARM: 6.05 % (6.16% APR)
Loans shown have no points, no prepayment penalties. Scenarios assume full doc pricing on purchase or rate/term refi (but not cash-out refi) loans for borrower with 720 FICO score or greater, at least 20% equity, and 6-12 months reserves left over after close (retirement assets counted at 70% of value for reserves). Better or worse rates apply to specific client profiles. Better rates are available using tax deductible points. ARM rates adjust the first month after initial fixed period shown, and once per year thereafter until year 30. Adjusted rate calculated by adding 2.25% margin to 1yr LIBOR index at time of adjustment. At first adjustment LIBOR+margin cannot exceed start rate+5%, subsequent yearly adjustments can never be greater than 2% per year, total of all adjustments for 30yr life of loan can never exceed start rate+5%. This is not a loan commitment nor a loan guarantee, rates based on loan amount ranges shown and rates available at the time of production. Rates subject to change without notice. California Department of Real Estate license #01376428. Equal Housing Lender.
Julian D. Hebron
RPM Mortgage, Van Ness