Mortgage Rate Update 7/30/10


Uncertainty about the pace of the economic recovery pushed mortgage rates down to another record low this week. The economic outlook is for slower than normal economic growth with low inflation, which is favorable for mortgage rates. The risks of a “double dip” recession and deflation also increase demand for relatively safer investments such as mortgage-backed securities (MBS).

The consensus economic outlook is for slower than average economic growth for several years. The Gross Domestic Product (GDP) report released this week was consistent with this view. GDP increased at a 2.4% annual rate during the second quarter of 2010, which was below the long-term average of about 3.0% per year. With a high Unemployment Rate, below normal economic growth is far from ideal for the labor market, but this is what investors expect. If the economy performs much more poorly, however, the consequences could be severe. The Fed’s Bullard stated this week that he is worried about the risk of a deflationary period in the US similar to that of Japan, which would be very undesirable for the economy, but which would likely lead to lower mortgage rates. He emphasized that he thinks that the most likely scenario is for continued modest economic growth.

The best steps to take to stimulate the economy are being highly debated right now. It’s not clear whether further monetary stimulus from the Fed would be effective enough to offset the downside effects. As a result, most Fed officials feel that they should not take additional actions unless the economy experiences a major downturn. Given enormous budget deficits, fiscal stimulus (more government spending) is also a highly contested option. The Fed’s Fisher pointed to uncertainty about government policies and regulations as a major obstacle for faster growth, but this may not change very quickly. In any case, if the economy follows the expected path for modest economic growth, it may be difficult for the Fed or the government to launch any major new stimulus actions.

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

Here are this week’s rates:

Friday, June 18th, 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 = 4.500% APR = 4.577%

15 yr conforming fixed: rate = 3.875% APR = 3.950%

5/1 yr conforming FHA ARM: rate = 3.625% APR = 3.324%

5/1 yr conforming ARM: rate = 3.500% APR = 3.573%

30 yr FHA Fixed : rate = 4.500 APR = 5.105%

30 yr CHFA w/ 1 pt : rate = 4.125% APR = (see below)


CHFA (Connecticut Housing Finance Authority) rates for the week of June 17 – June 23 , 2010

Homebuyer Mortgage Plan:

Interest rate: 4.125 % (APR range 4.225 – 4.625%)

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: 4.125 % (APR range 4.225 – 4.625%)

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 .

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  1. Pingback: Mortgage Rate Update 8/20/2010 | Wallingford Wired

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