Mortgage Rate Update 3/12/10

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During a very light week for economic news, the economic data and Treasury auctions contained few surprises and produced little reaction in mortgage markets. Mortgage rates ended the week nearly unchanged.

In early 2009, the Fed embarked on a $1.25 trillion mortgage-backed securities (MBS) purchase program to help keep mortgage rates low and stimulate the economy. The amount purchased varied from week to week, reaching a peak of $33.2 billion in the week of March 25, 2009. The Fed has been gradually reducing the size of its purchases at a pace consistent with a March 31 conclusion of the program, and the most recent weekly purchases have been down to around $10 billion.

As the date nears, the big question is what will happen when the MBS purchase program ends. This program is unprecedented, making the outcome difficult to predict, and forecasts vary widely. Estimates for the impact on mortgage rates from the conclusion of the program vary from an increase of one percent to no change. Those who predict higher mortgage rates point to a basic change in the fundamental supply and demand. The added demand from the Fed was widely credited with moving rates lower, and a decrease in demand would typically push rates higher. However, other economists argue that investors respond only to unexpected news. In this view, since the Fed has telegraphed the end of the program for months, there should be little reaction around March 31. The Fed itself has indicated that they expect a modest increase in mortgage rates due to the end of the program.

For expert assistance with your financing needs, call Michele Poulin, Retail Sales Manager at Wells Fargo, (203) 440-3745.

Here are this week’s rates:

Friday, March 12th, 2010

All rate quotes are for a 60-day lock with 0 points and a 720 FICO score.

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

30 yr conforming fixed: rate = 4.875% APR = 5.108%

15 yr conforming fixed: rate = 4.250% APR = 4.494%

5/1 yr conforming FHA ARM: rate = 3.750% APR = 3.039%

5/1 yr conforming ARM: rate = 3.750% APR = 3.476%

30 yr FHA Fixed : rate = 5.125 APR = 5.502%

30 yr CHFA w/ 1 pt : rate = 4.375% APR = 5.014%

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CHFA (Connecticut Housing Finance Authority) rates for the week of March 11 -17 , 2010

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 Harriman Real Estate LLC and Wells Fargo Home 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 .

Harriman Real Estate LLC, 852 Clintonville Rd., Wallingford, CT 06492

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