Lending Landscape - February 28, 2008

The lending landscape is getting more muddled as long term mortgage rates continue to rise, despite efforts from the Federal Reserve board to keep them low. Over the past week, fixed rates have increased to levels we saw last November.

The government-sponsored loan buyer said 30-year fixed-rate loans averaged 6.24% for the week ending Thursday, up from 6.04% last week.

Last year at this time, the 30-year rate averaged 6.18%, Freddie Mac said.

Short term rates were up slightly this week, but are still far below last year's levels. In testimony to Congress this week, Fed chairman Ben Bernanke indicated willingness to cut rates further at the next meeting in March. This should provide additional downward pressure on adjustable rate mortgages.

The Fed has had great difficulty controlling long term rates. When they wanted higher rates, long term rates stubbornly held level. Now that they want lower rates, the trend is reversing. One thing is certain and that is the markets are volatile. Even though rates trended up last week, as of this writing they appear to be headed down.

For new home buyers in Utah it's important to consider that an adjustable rate mortgage may be of benefit given the downward trend in short term rates. Further, long close dates, particularly for new construction could possibly allow a clearer economic picture to emerge.

Lending Landscape - February 21, 2008

The lending landscape has seen fixed mortgage rates increase over the past week, while adjustable rates continue to decline after several rate cuts from the Federal Reserve Board. Even as fixed rates have moved up, they are still nearly a quarter point lower than last year.

The government-sponsored loan buyer said 30-year fixed-rate loans averaged 6.04% for the week ending Thursday, up from 5.72% last week.

Last year at this time, the 30-year rate averaged 6.22%, Freddie Mac said.

One-year Treasury-indexed ARMs averaged 4.98%, down from 5% last week. At this time a year ago, the 1-year ARM averaged 5.49%.

Fixed mortgage rates have been very volatile this year given the uneasiness about the economy and declines in the stock market. In Utah, new home sales have slowed considerably, but prices are holding ground. Builders are offering discounts and promotions unheard of in the market during the recent boom. In combination with lower interest rates, it's a very attractive time to buy a new home.

Lending Landscape - February 7, 2008

Mortgage rates continued to hover at near record level lows in the past week. Concerns for the economy should keep them at this level for some time to come.

The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 5.67% for the week ending Thursday, down from 5.68% last week, and still well below rates at this time last year Freddie Mac noted.

At this time last year, the 30-year fixed-rate mortgage averaged 6.28%, Freddie Mac said.

Congress approved a financial stimulus package that besides handing out cash, will raise the loan limits for conforming and FHA loans for six months this year. In combination with lower rates, this could allow new home buyers additional purchase power. While many new homes in Utah fall well within FHA ($366,000) and conforming ($417,000) loan limits, the temporarily higher limits could make stretching for a dream home worthwhile.