Weekly Mortgage Rate Commentary

After weeks of turmoil, mortgage rates were relatively stable last week with no real surprises in economic data or news. While many ideas, bills, regulations and rules were debated last week, we had a quiet week in terms of new government-related programs around housing or mortgages. GDP was left unrevised at 0.6% for the final quarter of 2007. While certainly weak, we did not slip into recession in 2007. Consumer Confidence numbers did drop, as did other measures of consumer attitudes. While the economy is weighing heavy, many experts are expecting attitude measures to continue to decline, especially if gas prices climb to levels predicted by some consumer groups.

The biggest news of this week is likely to be Friday's Employment Report. While there are expectations of another sizable drop in the number of jobs in the US, and another tick upward in the unemployment rate, the market has mostly priced in this bad news and mortgage rates are unlikely to be driven down by a weak report. However, an addition of jobs may drive rates upward quickly.

Many Are Paying More for Mortgages

In response to the current credit markets, the Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac have implemented new credit score (FICO score) and Loan-To-Value (LTV) driven pricing. This makes pricing a loan and comparing pricing on conventional conforming loans even more difficult. Someone with a credit score as high as 719 will pay a premium to obtain a mortgage.

The following are the new price adjustments for vanilla conforming thirty year fixed rate mortgages:

LTV 60.01% to 70%
Credit Score 640 -719 is a 0.500% cost
Credit Score 620 - 639 is a 0.750% cost.

LTV 70.01 or More
Credit Score 680 to 719 is a 0.500% cost
Credit Score 660 - 679 is a 1.250% cost.
Credit Score 640 - 659 is a 1.750% cost
Credit Score 620 - 639 is a 2.500% cost

These costs are to the discount points, one discount point is equal to 1% of the loan amount, and can be translated into the actual rate. Remember the less upfront points the higher the note rate.

This means it is wise to consult with a knowledgeable mortgage professional early on in the purchase or refinance process. The mortgage professional may be able to provide some advise to gain a few points to a FICO score, which means saving thousands of dollars.

Paul Cantor is a mortgage planner in Central Virginia. He may be reached at (804) 433-1510 or at www.PaulCantor.com

Weekly Mortgage Rate Commentary

Long-term mortgage rates were pushed downward last week as the Fed continues to aggressively provide liquidity to the struggling credit markets. The Fed slashed interest rates again by 3/4 of a point and announced direct lending to troubled financial institutions. The Office of Federal Housing Enterprise Oversight (OFHEO) also announced an initiative that should enable Freddie Mac and Fannie Mae to pump $200 billion into the mortgage market. This helped drive rates down, as Freddie and Fannie will be able to buy more loans. Experts expect loans purchases to happen faster now.

We could see long-term mortgage rates continue to drift downward this week as the market continues to absorb the moves from the Fed and OFHEO. While there is no question that the economy has slowed, the question will be whether all the recent efforts to stimulate the economy will have the desired effect, and how quickly it will happen. One downside of this stimulus may be an unwanted jump in inflationary pressures. If inflation springs upward, mortgage rates will start to climb upward.

Paul Cantor is is a mortgage planer at TrustMor Mortgage Company in Geln Allen, VA. He is a frequent speaker at local real estate financing forums. He may be reached at (804) 433-1510. or at www.PaulCantor.com

Fed Drops tthe Fed Funds Rate by .75%

The Fed just lowered the Fed Funds Rate .75% and the Discount Rate .75%. This results in the following current rates:

Discount Rate 2.5%
Fed Funds Rate 2.25%
LIBOR 2.56%
Prime 5.25%

How does the Fed affect mortgage rates?Well, if you have a home equity line of credit based on Prime or short term ARMs based on LIBOR, you should see an immediate reduction in your interest rate in the coming weeks. However, if you are considering a fixed rate loan or longer term ARM with a fixed period of 3, 5, 7 or 10 years, rates on those types of loans are not directly related to the Fed. Instead, these rates are closely tied to the Mortgage Backed Securities that trade on the bond market. As typically seen long term mortgage rates spiked on the news. The financial markets are extremely volatile and most likely mortgage rates will continue their roller coaster ride; advise is to set a target rate and lock when it is available.

Paul Cantor helps clients make informed decisions regarding their finacil needs and may be reached at TrustMor Mortgage Company on the web at www.PaulCantor.com or by phone at (804) 433-1500.

Weekly Mortgage Rate Commentary

Last week proved to be another extremely volatile one for mortgage backed securities. Retail sales data came in lower than expected, and the Consumer Price Index held steady. Unfortunately, this data failed to move mortgage rates downward as usually expected. The culprit continues to be lack of investor interest, and the situation is unlikely to improve anytime in the immediate future. Thursday news of The Carlyle Group, which manages a portfolio of mortgage-backed securities, not being able to meet a margin call and being forced to sell large amounts of high quality mortgage paper into the markets at great financial losses was followed by news Friday of the collapse of investment bank, Bears Stearns, which is being rescued by an unusual move by the New York Fed and JP Morgan Chase.

This week is loaded full with market moving reports, expect another roller-coaster ride for mortgage rates. We'll get the latest readings on the health of the manufacturing and housing sectors, but the main event will take place on Tuesday when the Federal Reserve announces its latest interest rate decision and Policy Statement. The Fed meets is expected to slash interest rates by another '/2 point. With last week's unchanged CPI, some analysts are calling for a 3/4-point cut. The Fed's Policy Statement will also be scrutinized. Remember when the Fed cuts short term rates typically long term mortgage rates go up. Advice is to minimize the risk of volatile in the market and lock.

Paul Cantor is a mortgage planner at TrustMor Mortgage in Richmond, Virginia. He may be reached at (804) 433-1510 or on the web at www.PaulCantor.com .

Benefits of The New Conforming & FHA Loan Limits

Per the economic stimulus package, temporary conforming and FHA loan limits have been released and they are higher then we anticipated. This is for FHA and Conforming loan amounts through the end of the year:


Richmond City MSA $528,750
Washington DC Metro $729,750
Charlottesville MSA $425,000
Winchester MSA $475,000
VA Beach/Norfolk MSA $428,750


What this means:


Lower Rates on mortgages greater than $417,000.
Higher Loan to Values on loan sizes greater than $417.000.
More Flexible underwriting guidelines for loans over $417,000.


Loan limits are higher for 2,3 & 4 family properties. These loan amounts apply to all conforming and FHA loan types (except reverse mortgages), this includes fixed terms of 40, 30, 25, 20, 15 and 10 years and a variety of ARM and interest only products. This is a temporary increase is valid for loans closing through the end of 2008.

For additional information contact Paul Cantor at (804) 433-1510 or on the web at www.PaulCantor.com .

Weekly Mortgage Rate Commentary for the week of March 9, 2008

Mortgage backed securities experienced one of the most volatile rides ever seen last week, once all was said and done rates on fixed rate mortgages were up about 0.375%. Economic news continued to be mostly sour last week with the Labor Department's Employment Report highlighting the current economic challenges. While the unemployment rate did tick downward to 4.8%, the drop was due mostly to qualified job seekers giving up on finding a job. The economy also shed another 63,000 jobs last month, and the ISM Manufacturing Index slid below 50, indicating that manufacturing may be contracting. Generally, this much negative economic news would drive mortgage rates downward. However, because investors have been less interested in mortgage-backed instruments, mortgage rates have been held higher. Additionally, many institutions have been selling parts of their portfolios of mortgages, often at a discount. This additional supply of cheap mortgage investment products in the marketplace has kept rates from dropping even further.

The instability in the market is likely to continue this week as several indicators of the economies health will be release, including: Retail Sales, Initial Jobless Claims, Consumer Sentiment and the inflation-measuring Consumer Price Index. Advice to borrowers is to lock to protect them from the volatile market swings.

Paul Cantor is a mortgage planner at TrustMor Mortgage Co., in Richmond, VA. He may be reached at (804) 433-1510 or on the web at www.PaulCantor.com

FHA & Conforming Loan Limits

An Early present from HUD.

About one week prior to the date required by legislation, FHA & Conforming loan limits per the economic stimulus package have been released and they are higher then we anticipated. This is for FHA and Conforming loan amounts through the end of the year:

Richmond City MSA $528,750
Washington DC Metro $729,750
Charlottesville MSA $425,000
Winchester MSA $475,000
VA Beach/Norfolk MSA $428,750

All other areas of the state are showing the max loan amount of $417,000. Homes with more than one unit have higher loan limits.

To look up other areas visit: https://entp.hud.gov/idapp/html/hicostlook.cfm

Weekly Mortgage Rate Commentary

Last week was another volatile one for the mortgage market. Mortgage rates marched higher for much of the week as investors continued to be hesitant about even good-quality, mortgage-backed investments. Existing and new home sales numbers again revealed that the bottom has yet to be found for the struggling housing market. Fed Chair Bernanke's comments last week regarding the Fed's increasing willingness to provide economic stimulus, and an unrevised GDP should provide some downward pressure on rates as we start the first week of March. By the end of the week fixed mortgage rates began to see some improvement ending up slightly lower.

This week will probably be another bumpy week for mortgage rates, with some very important data due. The week starts with expectations of a below-50 ISM Manufacturing Index. If the reading drops below 48.5, we could see rates reverse much of last week's climb. The week ends with an extremely important monthly employment report. After last month's net loss of jobs, another loss of jobs would very likely drive mortgage rates downward. Add in an increase in the unemployment rate, and all interest rates are likely to end the week, and start the following week, on a downward trajectory.

Paul Cantor is a mortgage planner at TrustMor Mortgage Co., in Richmond, VA. He may be reached at (804) 433-1510 or on the web at www.PaulCantor.com