Tag Archives: Fixed rate mortgage

Is It Finally Time to Refinance?

16 Sep

Rates for a jumbo fixed-rate mortgage have dipped to a year-to-date low
By Anya Martin Wall Street Journal Sept. 3, 2014 1:14 p.m. ET

Average rates for a jumbo 30-year fixed rate mortgage dropped to a year-to-date low of 4.15% in the week ending Aug. 29, according to mortgage information site HSH.com. Chris Gash

Jumbo borrowers who missed last year’s refinance train now have an opportunity to jump aboard.

Average rates for a jumbo 30-year fixed-rate mortgage dropped to a year-to-date low of 4.15% in the week ending Aug. 29, according to mortgage-information site HSH.com. Average rates for this type of mortgage were as high as 4.7% in January.

Stamford, Conn.-based Luxury Mortgage, which serves high-end clients in Connecticut, New Jersey and New York, is seeing a slight uptick in jumbo refinance applications. Luxury Mortgage’s Managing Director Peter Grabel says that these borrowers aren’t only refinancing because of lower rates. Clients are consolidating debt, replacing a home-equity loan, shortening the length of a loan or converting an expired adjustable-rate mortgage to a fixed-rate one.

The uptick has yet to approach the boom of 2013, when borrowers, energized by even lower rates, started a refinancing frenzy. Refinances of all mortgages accounted for 78% of total mortgage origination dollar volume in January 2013, according to Inside Mortgage Finance, an industry newsletter. Since many eligible borrowers have already refinanced, by the second quarter of 2014, that number fell to 36%, the second-lowest overall volume since the 1980s, says Guy Cecala, CEO and publisher of Inside Mortgage Finance.

While he hasn’t seen a substantial pick up in refinancing, Mr. Cecala says refinancing might make sense for borrowers who lacked sufficient home equity in 2013, but may now qualify because of a subsequent rise in home values.

Conventional borrowers are often advised that new rates need to be at least one-half point below their current rate to compensate for the cost of the refinancing itself. However, since jumbo loan amounts are larger, even a quarter or one-eighth percent change in rate can result in substantial savings in interest payments over the loan’s life, says John Schleck, centralized and online sales executive for Bank of America Home Loans.

Jumbo borrowers considering a refinance should weigh their financial picture, including how long they plan to stay in their home, their job situation, their retirement plans and their investment situation, Mr. Schleck says. Because access to large amounts of cash may be more or less important at certain life stages or circumstances, high-end borrowers should consult not just a mortgage professional, but also their investment adviser or private banker, he adds.

Another refinancing advantage for jumbo borrowers is that many lenders are now hungry for jumbo loans, Mr. Cecala says. Lenders have been loosening underwriting qualifications, including minimum credit scores and loan-to-value ratios, he adds. “[Jumbo] borrowers who ran into trouble getting qualified or approved for refinancing a year or two ago definitely should check out whether it makes sense now,” Mr. Cecala says.

Jumbo borrowers who plan to move within the next five years may also save by switching from a 30-year fixed-rate loan to a five-year ARM, says Keith Gumbinger, vice president at HSH. Average jumbo 5-1 ARM rates were as low as 2.97% for the week ending Aug. 22, but crept up slightly to 3.02% for the week ending Aug. 29, according to HSH.

Interest-only ARMs are another good option for clients with cash-flow issues, allowing them to have a lower monthly payment and then make an end-of-the-year lump-sum payment—perhaps after a bonus arrives—to reduce the principal amount, Mr. Schleck says. With a refinance, “it’s more important to find the right product for your situation than to get the lowest rate in the wrong product,” he adds.

Here are a few more tips to consider if contemplating a jumbo refinance.

Appraisals still matter. Most jumbo mortgages will only make loans up to 80% of appraised value, but appraisals tend toward conservative estimations and lag behind market conditions, Mr. Cecala says.

Speak up. Because lenders are eager to expand their jumbo-mortgage portfolios, borrowers should shop around and not hesitate to negotiate rates and fees, Mr. Gumbinger says. “I wouldn’t say that you are in the catbird seat per se, but [jumbo borrowers] may be able to negotiate some concessions and a greater level of customer service,” he adds.

Breathe. Borrowers who aren’t ready to refinance now don’t need to feel pressured to hurry. Rates are likely to remain stable through year-end, though they could climb back to the mid-4% range by next spring for a 30-year fixed-rate jumbo, Mr. Gumbinger says.


Date Set For Elimination OF HECM Fixed Standard

5 Feb

The FHA has finally set the date for the discontinuation of the Fixed Standard HECM (Home Equity Conversion Mortgage) reverse mortgage.

Per MORTGAGEE LETTER 2013-1 from HUD, all fixed interest rate case numbers assigned on or after April 1, 2013 can be SAVER products but no longer Standard HECMs.

Read the Mortgagee letter here:


All fixed interest rate mortgages that were assigned a FHA case number on or before March 31, 2013, may be processed as either a HECM Standard or HECM Saver as the initial MIP; but any fixed interest rate HECM Standard mortgage must close on or before July 1, 2013.

There has been much discussion in online reverse mortgage forums as to the value of this change.  Some applaud the move, while others question whether it will make a difference.  One motivation for the change was the depleted state of the FHA insurance reserves in a declining housing market.  But will depriving senior borrowers of one avenue for reverse mortgage financing hurt them?

New Low For Mortgage Rates

2 Oct
A percent sign.

A percent sign. (Photo credit: Wikipedia)

The Federal Reserve’s new stimulus has sent mortgage rates plummeting.

Freddie Mac’s Primary Mortgage Market Survey showed new record lows in all categories except the 5-year adjustable-rate mortgage (ARM), which did show a decrease from the week before. The GSE reported that the 30-year fixed average fell to 3.40 percent (0.6 point) for the week ending September 27, down from 3.49 percent in the previous week’s survey.

The 15-year fixed also dropped, averaging 2.73 percent (0.6 point) – down from 2.77 percent.

The continuous drops add to an already amount of good news for the housing market.

“Fixed mortgage rates continued to decline this week, largely due to the Federal Reserve’s purchases of mortgage securities, and should support an already improving housing market,” said Frank Nothaft, VP chief economist for Freddie Mac. “For instance, the S&P/Case-Shiller 20-city home price index rose 1.2 percent over the 12 months ending in July, reflecting the largest annual increase since August 2010.”

Nothaft also pointed to new home sales, in particular the strong two-month pace set in July and August.

According to Bankrate’s weekly survey, the 30-year fixed average is down to 3.55 percent from 3.70 percent a week before. The 15-year fixed fell along with it, averaging 2.88 percent (from 2.95 percent previously). The 5/1 ARM also fell, but only slightly – it averaged 2.68 percent for the week, down from 2.69 percent a week ago.

Rates Hit Record Lows – Again

6 Jul

According to Freddie Mac’s weekly survey that came out July 5, rates have dropped again.  A 30-year fixed is at 3.62%, down from 3.66% last week. This time last year it stood at 4.60%.

15-year fixed rates are at 2.89%, compared with last week’s 2.94% and last year’s 3.75%.

Spending is trending up as a result.  Latest figures are from May, showing construction spending up 0.9% month-over-month and a jump of 7.0% from last year.  Private residential spending increased 3.0% month-over-month.


27 Dec

Mortgage interest rates continue to head south. Freddie Mac reported last Thursday that the 30-year fixed-mortgage rate as well as adjustable rate products all sank to new all-time record lows this week, while the 15-year fixed rate settled in to match its historic low.

The 30-year fixed-rate mortgage averaged 3.91 percent (0.7 point) for the week ending December 22, dropping below last week’s previous record low mark of 3.94 percent. The average 30-year rate is now nearly a full percentage point below its level this time last year of 4.81 percent.

“Rates on 30-year fixed mortgages have been at or below 4 percent for the last eight weeks and now are almost 0.9 percentage points below where they were at the beginning of the year,” noted Frank Nothaft, Freddie Mac’s chief economist.

Nothaft says all those percentage basis points translate into $1,200 less a year on a $200,000 loan when you compare current rates versus borrowing costs 12 months ago.

The 15-year fixed rate matched last week’s all-time record low at 3.21 percent (0.8 point). A year ago at this time, the 15-year rate was averaging 4.15 percent.

Adjustable-rate mortgages (ARMs) also hit new all-time lows in Freddie Mac’s survey this week.

The GSE puts the average rate for a 5-year ARM at 2.85 percent (0.6 point) That’s down from 2.86 percent last week and 3.75 percent a year ago.

The 1-year ARM came in at 2.77 percent (0.6 point) this week, down from last week when it averaged 2.81 percent. At this time last year, the 1-year ARM was averaging 3.40 percent.

Nothaft says the greater homebuyer affordability afforded by today’s rock-bottom interest rates helped push existing home sales higher for the second consecutive month in November to an annualized pace of 4.42 million, the most since January.

Freddie’s chief economist also points to positive indicators in the new home sector, with construction of single-family showing a back-to-back monthly gain in November, with the largest increase since June, and homebuilder confidence in December rising to its highest reading since May 2010.


31 Oct

lAST WEEK, the Mortgage Bankers Association said the refinance index climbed 4.4% from the previous week, while the seasonally adjusted purchase index jumped 6.4%.

Mortgage applications rose 4.9%.  Refinancing applications accounted for 77.3% of this activity.

The average interest rate on a 30-year, FRM backed by the FHA fell to 4.11% from 4.12%, while the 15-year, FRM increased to 3.62% from 3.61%.

In addition, the average contract interest rate for 5/1 ARMs increased to 3.11% from 3.08%.