Maureen Megowan's Blog


Mortgage Interest Rate Update

Interest rates have stayed within a very narrow range over the last couple of weeks. Some volitility in the interest rate market may take place over the next few months as Fannie Mae and Freddie Mac lower the maximum loan limit amount that they will purchase. The following are some excerpts from this week's newsletter on interest rates from HSH Associates :

Certain regional markets are likely to be affected by the forthcoming change to the loan limits that Fannie and Freddie are allowed to purchase. The coming reduction in the "maximum maximum" loan limit in high-cost markets of $729,750 will be reduced to $625,500 for loans delivered to the GSEs no later than September 30. Since it takes perhaps 60 days to get a purchase transaction done these days, borrowers should expect to see lenders invoking these new lower limits in the next few weeks.

The change in limits means potential borrowers with loans which would fall between the old limit and the new limit (which varies by area, depending upon home prices) will be exposed for the first time in over three years to the vagaries of the private mortgage market, where the availability and price of mortgage money can vary widely from place to place and lender to lender. While there are of course concerns about borrowers not being able to qualify and questions as to how robust the private market may be, we don't expect these borrowers to be met with a catastrophic loss of mortgage availability or sky-high interest rates. Interest rates on private-market jumbos have recently been at all-time lows, and remain near there at the moment, so the price jump from an "agency jumbo" to a private one is only about three-eighths of a percentage point at the moment."

 " Moreover, with the Federal government out of the way, as this is a highly valuable market for lenders to pursue. We expect that, after a period of adjustment (perhaps from August to late in the year) that lenders will be strongly attracted to compete for these borrowers again. In turn, new competition should lead to even greater availability of loans and possibly lower rates and looser underwriting standards over time. The loan limit change is a small but important first step in getting a functioning private mortgage market back in place ." 

"A busier calendar of economic data is due out next week. We'll get a look at the Fed's latest survey of regional economic conditions, sales of new homes, the Chicago Fed's wide-ranging indicator of activity, and our first look at second quarter 2011 Gross Domestic Product. We anticipate no real surprises that would impact mortgage rates to any great degree, and rates will drift by a few basis points, most likely upward. "


The following are interest rate quotes from Al Hermann of American/California Financial Services ,


30 Yr Fixed FHA










Conforming 30 Yr Fixed up to $417000










Conforming Jumbo 30 Yr Fixed $417001 - $729750










Jumbo 30 Yr. to $1.5 Mil










Jumbo 7/1 ARM $1.5 Mil (higher loan amt available)









The following are interest rate quotes from Jan Schott Bank of America, Home Loans 310-802-2300 :


Conforming Loans to $417,000

5 Yr Fixed:         2.750% @ 1.000/pts                      3.000% @ 0/pts

30 Yr Fixed:      4.500% @ .500/pts                         4.750% @ 0/pts


Conforming High Balance to $625,500

5 Yr Fixed:         2.875% @ 1.000/pts                      3.125% @ 0/pts*

30 Yr Fixed:      4.500% @ 1.000/pts                      4.750% @ 0/pts


Non-Conforming to $729,750 (temporary loan limit to 09/30/2011)

5 Yr Fixed:         3.125% @ .500/pts                        3.375% @ 0/pts *

30 Yr Fixed:      4.625% @ .375/pts                        4.750% @ 0/pts


Non Conforming to $2,000,000

5 Yr Fixed:         3.375% @ .625/pts                        3.625% @ 0/pts

30 Yr Fixed:      4.875% @ .875/pts                         5.125% @ 0/pts


FHA Fixed to $625,500

30 Yr Fixed:      4.500% @ .625/pts                        4.750% @ 0/pts

For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.

Comment balloon 0 commentsMaureen Megowan • July 23 2011 06:40PM


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