Freddie Mac reported that 30 yr fixed rates had dropped to an average 5.875% with one-half point last week. Today was a fairly quiet day devoid of economic news that would sway the markets. The big news of the week comes Friday with March�s employment numbers. Economists surveyed expect a net loss of 70,000 jobs, exceeding February�s 63,000 loss.

CalHFA Pulls Back Max LTV

CalHFA has cut back its maximum loan-to-value in �declining markets� from 100% to 95%, following a long processional of lenders and programs that have recently said goodbye to 100% finanincing. FHA (97% LTV) is all that is left, but if you add a twist of Nehemiah you can get to 103% of the purchase price. Again, there are no income limits for FHA or Nehemiah, and the maximum FHA loan limit has been increased to $580,000 for the Sacramento MSA.

Need help with an FHA loan? Don�t trust your future to someone who has only just started doing these. Call me.

Other than a brief rise in February�s existing home sales that sparked Monday�s stock rally the rest of the economic news has been bad. New home sales fell in February, and remember that new homes are considered �sold� at Contract, not at close. Cancellations are never acknowledged in the numbers; they are simply left to sort themselves out in the long run. This leads to a short-term overstatement of sales and and understatement of inventory. As Credit Union National Association�s Mike Schenk so aptly put it, �We have two problems: supply and demand.�

Sliding consumer confidence, no decline in the inventory levels of homes, and today�s drop in durable goods all point the same direction. Monday�s stock market rally has turned sour, and money is flowing into bonds. Treasuries are up this morning, and the Fannie Mae MBS 5.5% coupon is up 8/32nd�s, indicating a possible slight improvement in mortgage rates today. We�ll see how stingy and cautious the banks are about passing that along to the consumer.

So mortgage rates fell a bit this week. Freddie Mac says the average 30 yr fixed was around 5.875% with 1/2 point and the 5/1 ARM around 5.5% with 1 point. The new conforming jumbo rates�between $417k and $580k in the Sacramento MSA�were about 1% higher, and regular jumbo rates about 1% higher than that. Jumbo rates have gotten even uglier in the recent crisis of confidence surrounded the Bear Stearns collapse and the stampede for the exits of MBS investors.

What�s Next for Mortgage Rates?

Well, we�ll get a look at the inflation factor this next week. Expect the bond market to be hypersensitive to any signs that the recent Fed easing is igniting inflation again. Bernanke is clearly in a pickle now, having had to bail out the investment banks to prevent a bank run that would have rivaled the 1930�s. If inflation fears catch fire, the Fed will have a tough choice to make. This may be bottom for mortgage rates, and by summer the Fed may have to begin the painful process of tightening. It sucks being Ben right now.

Buying Activity Picks Up

It might be premature to call it a trend just yet, but I�ve seen an increasing level of purchase activity the past two weeks across all price ranges. Investors and home owners alike seem to feel like the bottom is near and don�t want to wait for the competition to drive up prices. If I�m right and rates are as low as they�re going to get, this is the time.

Anyway, I hope you have a Happy Easter!

Technorati Tags: Sacramento Mortgage, real estate, conforming loan limits

Bookmark this article:

Lenders have finally begun pricing the new Jumbo Conforming Loans. So far, Fannie Mae will only be accepting delivery of the 30 year fixed on April 1, with the 5/1 ARM on May 1. Here is a comparison of the a) normal conforming 30 yr fixed, b) the new jumbo conforming 30 yr fixed, and c) the regular jumbo 30 year fixed, all from the same lender�s rate sheet today at 3pm.

a) 5.5% at 1 point / 5.875% at zero points
b) 6.5% at 1 point / 6.875% at zero points
c) 7.5% at 1 point / 8.000% at zero points

Similarly, here are the d) traditional FHA and e) new Jumbo FHA 30 yr fixed rates:

d) 5.750% at 1 point
e) 6.625% at 1 point

In my last post New FHA & Conforming Loan Limits Announced, frequent Lending Clarity commenter and knowledgeable industry professional Catherine Coy provides a link to Fannie Mae�s guidelines and pricing policies.

A quick read of Fannie�s guidelines revealed some key points about the new conforming loans, or what Fannie calls Jumbo Conforming loans. This list is by no means comprehensive, so you�ll have to read it yourself to get all the details. These are just the ones that seemed particularly noteworthy to me:

Fannie Mae Jumbo Conforming Highlights

• Fannie will start accepting delivery of 15 & 30 yr fixed-rate mortgage on April 1 and 5/1 ARMs on May 1. (Lenders will probably begin originating these immediately)
• All new jumbo conforming loans must be manually underwritten.
• No �Cash Out� refinances allowed
• Fixed rate, 5/1 interest-only, and 5/1 fully amortized loans only
• Minimum Fico 660
• Max purchase LTV/CLTV for fixed is 90% (700 Fico required over 80%)
• Max purchase LTV/CLTV for ARMs is 80%
• Max rate & term refi LTV/CLTV is 75/95%
• Max 2nd home and investment purchase LTV/CLTV is 60%.

Here�s the matrix�
Read the rest of this entry �

In my last post New FHA & Conforming Loan Limits Announced, frequent Lending Clarity commenter and knowledgeable industry professional Catherine Coy provides a link to Fannie Mae�s guidelines and pricing policies.

A quick read of Fannie�s guidelines revealed some key points about the new conforming loans, or what Fannie calls Jumbo Conforming loans. This list is by no means comprehensive, so you�ll have to read it yourself to get all the details. These are just the ones that seemed particularly noteworthy to me:

Fannie Mae Jumbo Conforming Highlights

• Fannie will start accepting delivery of 15 & 30 yr fixed-rate mortgage on April 1 and 5/1 ARMs on May 1. (Lenders will probably begin originating these immediately)
• All new jumbo conforming loans must be manually underwritten.
• No �Cash Out� refinances allowed
• Fixed rate, 5/1 interest-only, and 5/1 fully amortized loans only
• Minimum Fico 660
• Max purchase LTV/CLTV for fixed is 90% (700 Fico required over 80%)
• Max purchase LTV/CLTV for ARMs is 80%
• Max rate & term refi LTV/CLTV is 75/95%
• Max 2nd home and investment purchase LTV/CLTV is 60%.

Here�s the matrix�
Read the rest of this entry �

The new, temporary FHA and Conforming Loan Limits for 2008 were announced today by the Office of Federal Housing Enterprise Oversight (OFHEO). For the Sacramento Metropolitan Statistical Area (MSA), the new loan limit for single family homes is $580,000, a substantial increase over the current conforming loan limit of $417,000 and the current FHA loan limit of $362,790. You don�t live in Sacramento? Check your area here.

Weird Math

This a nice surprise! I was pretty sure that with a median price in the low $300k range as reported by DataQuick and NAR, the new limit wouldn�t offer Sacramento home owners much relief. But here�s the part that was not apparent in the language of the bill. This is from the OFHEO list:

the maximum temporary loan limit is calculated as 1.25 times the median house price for the highest priced county in the property�s metropolitan or micropolitan area

Ah! That makes a big difference.

The Final Puzzle Piece

So the last piece of the puzzle fits into place when we learn how the lenders will price the �jumbo conforming� loans. FHA says there will be no premium charged for the higher-than-normal FHA loan limits, but Freddie Mac has already declared that the new conforming loans will be segregated into different pools based on the increased risk of early payoffs.

Stayed tuned for that pricing, but let�s get your jumbo loan dialed in and ready to go. Rates are on the upswing, and we may not see rates fall any further.