Lending Landscape - January 17, 2008

As economic indicators worsen, mortgage rates are in free fall. Lending rates are significantly lower today than they were last year and are trending down from the previous week.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 5.69 percent for the week ending Jan. 17, down from 5.87 percent last week.

At this time last year, the 30-year fixed-rate mortgage averaged 6.23 percent.

Shorter term loans have also seen decreases based on economic news from major financial companies and in anticipation of the Fed further cutting rates at their next meeting.

Freddie Mac said 15-year fixed-rate loans averaged 5.21 percent, down from 5.43 percent last week. A year ago, the 15-year rate averaged 5.98 percent.

Five-year adjustable-rate mortgages (ARMs) averaged 5.40 percent this week, down from 5.63 percent last week. A year ago, the 5-year rate averaged 6.04 percent.

Rates are becoming significantly more attractive for potential new home buyers. While the GSEs entrusted with keeping the mortgage machine running smoothly, Freddie Mac and Fannie Mae, have enacted premiums for high loan to value loans and borrowers with less than excellent credit, FHA is looking more enticing in the current landscape. FHA loans are comparable rate wise with the printed listings and are far more lenient with down payments and credit scores. In Salt Lake County, FHA loans go up to $360,000.

It's true the nation is suffering a housing crisis, but in Utah favorable rates and FHA qualification are really making now an attractive time to buy a new home.