Low Mortgage Interest Rates and New Super Conforming Loans
Mortgage interest trends suggest that now might be a good time to be a home buyer in terms of affordability and risk:
Low Interest Rates - Average rate on a 30 year fixed conforming nationwide ended this week at 4.57%, which is another all time low for the fourth consecutive week! Â Refinance activity has picked up at Wells Fargo and in the industry to the point where all transactions are seeing delays. If you are doing a purchase loan it is imperative to get all documentation to your lender early.
Easier qualification for new super conforming loans – Wells Fargo is introducing a new program on 8/16/10 which will complement their high balance conforming product. The new product will be called a “super conforming loan and will have easier qualification guidelines and will be applicable to loans up to $1,000,000.
Tightening Interest Only Loans – On the other hand, effective next Monday 8/16/10 all interest only product at Wells Fargo will tighten it’s underwriting guidelines. Currently, interest only products are qualified using a fully amortized (principal + interest) payment. Starting Monday, all interest only products will be qualified using a fully amortized payment + 2.4%.
Slow Economic Growth Forecast – Economic data released this past week came in slightly below expectations, but remain consistent with Wells Fargo forecast of slow economic growth with a low probability of a double-dip recession.
Inflation Benign – Consumer prices in July, 2010 showed inflation remains benign. Contained inflation is good news for two key reasons: It increases consumers’ purchasing power and gives the Fed flexibility to keep short-term interest rates low.
Weak Retail Sales – Core retail sales, which exclude autos, gasoline and building materials, is now down 0.5 percent on a three-month annualized basis. The weak showing in core retail sales is reflective of slower consumer demand. Wells continues to expect sluggish consumer spending in coming quarters. This means demand for big ticket items such as homes is likely to remain moderate so prices should remain soft.
If you are considering making a home purchase, please call me and I can put you in touch with some great lender reps with Wells Fargo affiliate Private Mortgage Advisors.
Rick Bonetti | APR Referral Network | 408-857-8800 | DRE #01237009
