Mortgage Rate Update 11/20/09

by Harriman Real Estate on November 21, 2009

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A highly anticipated speech on Monday by Fed Chief Bernanke on the economic outlook revealed no change in the Fed’s stance on short-term monetary policy. There were also few surprises in the economic data released during the week. The monthly inflation readings continued to show that inflation is not a cause for concern in the short-term. As a result, mortgage rates barely moved during the week, remaining at historically low levels.

The decline in the value of the dollar has received a great deal of attention lately. While Fed officials rarely discuss the value of the dollar, Bernanke assured investors that the Fed is closely watching exchange rates. However, he then reminded investors that the Fed’s dual mandate is to promote full employment and to keep prices stable. According to Bernanke, the value of the dollar is just one of many factors affecting inflation, and the Fed is not concerned by the movement in the dollar so far. With a fragile economy and high unemployment rate, he suggested that the Fed intends to keep the fed funds rate at very low levels. Tightening monetary policy to strengthen the dollar would hurt the economic recovery and slow job creation. After the speech, the value of the dollar fell to the lowest level since August 2008.

If foreign investors expect the value of the dollar to continue to fall, it may pose a risk for mortgage rates in the future. Foreign investors historically have been major buyers of mortgage-backed securities (MBS). When the dollar falls, the value of US assets to foreign investors in their own currency declines, making US investments less rewarding. With the Fed scaling back its MBS purchases over the next few months, a drop in foreign demand would further pressure yields higher to fill the void left by the Fed.

For expert assistance with your financing needs, call our in-house mortgage executive, Rick Cannavaro, at (203) 672-2706.

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Here are this week’s rates:

Friday, November 20th, 2009

All rate quotes are for a 60-day lock with 0 points, 5% down payment, and a 720 FICO score.

Conforming limits are up to a $417,000 loan limit*

30 yr conforming fixed: rate = 4.875% APR = 5.110%

15 yr conforming fixed: rate = 4.375% APR = 4.648%

7/1 yr conforming ARM: rate = 3.750% APR = 4.014%

5/1 yr conforming ARM: rate = 4.875% APR = 5.230%

30 yr FHA Fixed : rate = 5.000 APR = 5.345%

30 yr CHFA w/ 1 pt : rate = 4.375% APR = 4.559%

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Jumbo loan limits range from $417,001 to $1,000,000*

30 yr jumbo fixed: rate = 5.375% APR = 5.552%

15 yr jumbo fixed: rate = 5.000% APR = 5.254%

7/1 yr jumbo ARM: rate = 4.750% APR =5.105%

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CHFA (Connecticut Housing Finance Authority) rates for the week of November 19 – November 25 , 2009

Homebuyer Mortgage Plan:
Interest rate: 4.375 % (APR range 4.475 – 4.875%)
Fees: Up to One Point (1% Origination Fee) * Payable to Lender
Term – 30 years, fixed rate

Downpayment Assistance Program (DAP)
(Rate listed is for DAP loans with Homebuyer Mortgage Program financing.)

Interest rate: 4.375 % (APR range 4.475 – 4.875%)
Fees: Up to $2000 Application Fee * Payable to Lender
Term – 30 years, fixed rate

(NOTE: If at any time the interest rate for the Homebuyer Mortgage Program exceeds 6%, the DAP interest rate will be capped at 6%.)

* Additional fees may apply

*Conforming loan limits listed above are for a single-family owner occupied residence.
Courtesy of The Harriman Team and William Raveis Mortgage

*All rates are subject to change. Minimum down payment and credit score requirements may apply. All information provided is deemed reliable but is not guaranteed and should be independently verified .

William Raveis Real Estate, 465 S. Main St., Cheshire, CT 06410