Mortgage Rate Round Up – July 12, 2008

This week started out well with mortgage rates dipping down as the week went on. But then IndyMac got shut down by the Feds, the Fannie and Freddie fallout happened and the stock market tumbled. Because of that, 30-year fixed rate mortgages jumped up yesterday to an average of 6.375 percent. The mortgage rate spike happened so quickly that BankRate didn’t even have a chance to incorporate the spike into the graph above.

With everything hitting the fan so late in the week, expect the turmoil to carry over into next week.

Hat tip: Darran Anthony; Photo Credit: BankRate.com

Mortgage Rate Round Up – June 21, 2008

Average rates on 30-year fixed mortgages in Northern Virginia fell slightly to 6.24 percent on Friday (basically even with last week). The mortgages in the survey had an average of 0.51 discount and origination points.

The highest rate on a 30-year fixed mortgage was found at two institutions that charged 7.000 percent. The lowest rate was found at four institutions that charged 5.750 percent. Six months ago, the average rate was 5.80 percent.

Source: Bankrate.com

Weekly Mortgage Rate Update

This is the first in a weekly series of posts regarding mortgage rates. The posts are aimed at keeping you in tune with what’s going on with mortgage rates currently and why.

The weekly mortgage rate update will be published every Saturday beginning this Saturday. The source of the information will be Darran Anthony of Suntrust Mortgage in Leesburg, Virginia, as well as other local and national loan officers and sources.

So here’s today’s mortgage rate update:

• Mortgage rates are rising this week
• The national average on a 30 year fixed is up from 6.125% to 6.375%

Here are some of the reasons why rates have are rising:

• A weak employment report last Friday
• Federal Reserve worried about inflation
• Soft demand for mortgage back securities

In a nutshell, rates are climbing due to weak economic figures, supply and demand and fear. But a mortgage rate of 6.375 percent is still great when compared to rates over the past 30 years. Buyers are still sitting pretty when it comes to mortgage rates.

A Look At Mortgage Rates In Virginia

Here’s a look at the average 30-year fixed rate mortgage and 5/1 ARM rates in Virginia over the past 3 and 12 months. (Click on any chart to enlarge)

Here’s a chart showing the average rate on a 30-year fixed rate mortgage in Virginia over the last 3 months:

Now here are the past 12 months:

As you can see, rates shot up almost a full point earlier this year, came down a bit in late February and are around 5.9 at the moment though pointing up.

Now let’s compare the average 30-year fixed rate mortgage rates to the average 5/1 ARM rates.

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Mortgage Rates End Week Higher

Mortgage rates inched higher this week despite a lack of strong economic news, Freddie Mac reported yesterday.

The average rate on 30-year fixed-rate mortgages rose from 5.67 percent to 5.72 percent, and the average 15-year fixed mortgage rate jumped from 5.15 percent to 5.25 percent.

Points, the fees that lenders charge for loan processing expressed as a percent of the loan, averaged 0.4 on the 30- and 15-year loans.

"This week was relatively light on the number of economic data releases, which painted a mixed picture regarding the current state of the economy," Frank Nothaft, Freddie Mac vice president and chief economist, said in a prepared statement. "On a positive note, labor productivity rose higher than market forecasts in the fourth quarter of 2007 while gains in labor costs slowed."

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How The Mortgage/Credit Crunch Affects You As A Home Seller or Buyer

If you’ve looked at any news pages online or picked up any newspaper recently, you know all about the subprime mortgage fiasco and how it’s caused investors to flee, money to dry up, the banks to inject money into Wall Street and the government to step in. But how does it really affect you as a home seller or home buyer here in Loudoun County, Virginia? To find out, let’s look at two real life scenarios that I ran across in the past 2 weeks:

1) I am representing sellers who have their town home up for sale. It was originally listed a few weeks ago at $449,900 and during that time, buyers that went through it said that it was just outside of their budget. This was based on the asking price and the interest rates (at that time), which came out to a certain monthly mortgage payment. The buyers asked that we let them know if/when the price was adjusted because they were very interested in the property, but just couldn’t afford that much.

Fast forward two weeks…

Based on market conditions and recent comps, we adjusted the price to $432,000 this past week. I immediately called the buyer’s agent to let her and her clients know of the new price and to see if her clients were still interested in the property. The buyer’s agent told me that due to the interest rates going up a quarter point the week prior, that her clients went from affording $430,000 to only affording up to $410,000.

The buyers lost $20,000 in purchase power and a chance to purchase the home they really liked while the sellers lost a potential buyer and sale and possibly, market value. All in just one week.

2) I am representing buyers who are looking to purchase their first home. We originally started our search almost a year ago, but something came up that made them put off purchasing a home until this month. Prior to searching last year, they spoke with a reputable lender and were approved for up to $360,000 based on their financials and the interest rates at that time. They spoke with the lender again two weeks ago and were told that the rates had gone up, but due to their financial situation improving since last year, they were approved up to $350,000. They weren’t thrilled, but they weren’t as upset as they would be shortly.

Fast forward two weeks…

Due to the interest rates going up almost a quarter point on conforming loans last week, they are now only approved to $340,000. They lost $10,000 in purchase power in one week.

But wait, it gets worst.

Due to the price points of town homes in Ashburn, the difference between a town home that is $350,000 and one that is $340,000 is huge.

• One car garage versus no garage
• Move in condition versus $5,000 to $10,000 in work and/or sweat equity
• New appliances versus original appliances
• 1700 square feet versus 1900 square feet
• Backs to common area versus backs to another town home
• More desireable location versus less desireable location (based on buyer feedback)

The list goes on. And yes. All for $10,000.

The buyers had their eye on a particular property and decided that they wanted to place an offer on it. After speaking with the lender and finding out that they could no longer afford to buy it, they were heartbroken. Every property they’ve seen since then (at the lower price point) is compared to the one they liked and now, they all "don’t work".

Though they will eventually get past it, it’s not fun to go through it for anyone. It hurts the buyers and the sellers whose homes the buyers saw and now "don’t work" because they’re stuck on the one they now can’t afford.

Well, it could be worse. According to some, there are consumers out there that may have been approved for a loan in the past, but may no longer be approved even if their financial situation stayed the same. Are you one of them?

Related Articles

Who Can’t Get A Mortgage Now – CNN Money

Mortgage Mania – Part 10, The Credit Crunch – 3 Oceans Real Estate

You Think The Subprime Mortgage Fall Out Won’t Affect You? Think Again – Loudoun Stats

Washington Mutual, National City and Now IndyMac – real/diaBlog

Thursday Poll-Have Interest Rates Effected Your Decision To Buy Real Estate?

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