July Is Here And It's Hot, In More Ways Than One!
It's been a good market for bonds, and therefore, mortgage interest rates. Bond prices gave us the lowest mortgage rates ever, with rates at 4.125%-4.25% or so for thirty year fixed rate mortgages, for well qualified buyers to 4.75% depending upon the day. Needless to say, mortgage lenders are busy, with three to four times their normal recent volumes, so expect loan approvals to take longer, and allow time if you are purchasing, for this unusually busy time.
Rates go up for several reasons right now, such as (most boringly), because we have hit a technical ceiling in the bond market and bonds haven’t broken through that resistance level.
Also, the stock market is doing well as I write this (about time!) and they were having their best day in a year on the second Friday of this month-so, investor money was flowing into the stock market, and not the bond market. Unfortunately, it's a short lived honeymoon, as the economy continues to struggle with high unemployment (10-17% depending upon how you calculate it), and sluggish consumer buying. The stimulus programs that gave our economy a shot in the arm earlier in the year have ended, and the economy is too weak to continue that rate of recover on it's own right now, sad to say.
Lenders are swamped and they raise rates a bit to help slow the volume of loan coming in, so they can move the loans through the process. Some banks are taking refinances on 90 day locks-so that tells you how long some lenders to take to close loans. Realistically, with purchase loans, you should expect three to four weeks for full approval with an efficient lender, and a salaried type borrower-complicated financials take longer, of course. In addition, I can’t emphasize enough the additional fees that banks are collecting now on mortgage loans to increase their revenue. As one bank president put it in a recent interview, they do it because they know many of their customers don’t compare their rates and fees, so they can continue to charge more than is needed, because they can. Banks increase their revenues with credit card, mortgage and checking account fees, so it pays to compare bank rates and costs with an efficient lender.
One of the reasons the stock market is having gains, is Greece recently approved a plan to increase their retirement age, and decrease their pension deficit, though many doubt that will be enough to help their budget crisis. In addition, the European bank voted to keep interest rates low to assist European countries struggling with the economic slowdown there. More to come on this as other European nations struggle with large debt loads and a slowing of purchases of consumer goods.
The purchase market also is becoming even more active, as potential purchasers look to take advantage of good home prices and historically low interest rates. Call me when you and your clients need an experienced mortgage lender with the resources, systems and rates to provide them a mortgage that will work well with their plans and budget. I’m happy and able to help.
Chérie McKeageResidential Mortgage Lender
1st Advantage Mortgage, LLC A Draper and Kramer Company
747 N LaSalle, Suite 600Chicago, IL 60154
Cell: (708) 267-2548 Office Direct: (312) 867-5363 x 224
EFax: (312) 654-7206
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