Courtesy of Alicia King, Suntrust Mortgage. (703) 335-6889

Mortgage bond prices fell considerably applying upward pressure on mortgage interest rates. Trading remained volatile. Energy prices subsided a bit but not enough to overshadow higher than expected inflation data. Consumer prices rose 1.1%, higher than the expected 0.7% increase. Mortgage bonds sold off following the release Wednesday and continued to fall the rest of the week. Fannie Mae and Freddie Mac bailout rumors turned out to be true. Unfortunately, the details remained unclear and left mortgage investors still on edge. For the week, interest rates on government and conventional loans rose by about 2 discount points or 1/2% in rate.
Leading economic indicators data Monday will set the tone for trading next week. Be cautious heading into the data releases.

Mortgage bonds prices fell last week applying significant upward pressure to mortgage interest rates. Trading was volatile throughout the week, as market participants remained concerned over the recent credit issues and inflation. Lower than expected unemployment and higher than expected average hourly earnings resulted in bonds falling considerably last Friday. Adding to the volatility were triple digit movements in stock prices throughout the week.For the week, interest rates on government and conventional loans rose by about 3/4 of a discount point.

The Fed meeting Tuesday will be the most important event this week. Trade data, retail sales, producer price index, consumer price index, industrial production, and capacity use data will also be important.

Fixed rate loans generally come with one of two options; the 30-Year Fixed and the 15-Year Fixed. If a borrower is planning on being in the same home for a long period of time, a 30-Year Fixed may be more attractive because it offers stability. The monthly payment will remain consistent over the life of the loan. If interest rates are at historic lows at the time the borrower is seeking to obtain financing, this is a good program to consider.

It is also possible to make pre-payments on a 30-Year loan and reduce the life of the loan, as well as the overall interest payment, without committing to the higher monthly payment of a 15-Year program. As long as there is no pre-payment penalty associated with the 30-Year mortgage, pre-payment offers the borrower the latitude to make additional payments when it is affordable. If cash flow becomes difficult, this arrangement will not put the borrower in a compromising position.

 Courtesy of David Messineo, APEX Home Loans 301-365-3100 Ext 110

Courtesy of David Messineo, Loan Officer
Apex Home Loans
301-365-3100

Fannie Mae and Freddie Mac have recently announced that conforming (non JUMBO) loan limits for a single family home in 2008 will remain at the current level of $417,000. This is the second consecutive year that loan limit has stayed the same, having been originally set at the current limit back in 2006. In the meantime, long term mortgage interest rates have remained stubbornly low. In fact, just last week, the 25 month low for 30 yr fixed rate mortgages was reached.Combine this with lower home prices and an increase in inventory in many neighborhoods, and today’s real estate market presents a variety of great long-term opportunities. Entire neighborhoods that you may not have been able to afford in 2005 could now be open to you! I have included a portion of Fannie Mae’s press release below, in case you would like to review it. Feel free to call me at your convenience to discuss potential opportunities for you or someone you know in need of mortgage financing.