Mortgage Lenders Sitting on The Fence, Trying to make a Dollar out of 95 Cents
With today’s market close, we have experienced a .302% decrease in the 10 Year treasury yield, which should mean that mortgage rates have decreased by the same amount…. Right? Well, in normal times yes, but today, no. In fact mortgage rates have nudged down very little in that time span.
It seems that mortgage lenders are still sitting on the fence and hoarding as much cash as possible. In fact, the lender spread premium in mortgage rates for shorter term 20 year, 15 year, 10 Year, and assorted 1 to 10 Year ARM mortgages have increased steadily in the previous three weeks.
There is little for lenders to get excited about as unstable home values, credit liquidity concerns, and inflation hold center court with little positive news as of late. Simple supply and demand tells us that lenders can charge a higher yield on mortgage rates because they have little worry about competition for your mortgage.
Fortunately for those that enjoy low mortgage rates, the treasury yields are at such a low level that we are still experiencing near historic low mortgage rates, despite the non-historic high lender spread.
Now, these historic low mortgage rates do not apply to everyone. As the loan-to-value ratio heads above 80% to the 95% level, lender spreads and mortgage rates are increasing significantly. In my opinion, FHA home loans will be the best bang for your buck if you are refinancing at over 85% LTV. FHA mortgage rates are still at excellent levels for those high equity loans and should at least be checked out before blindly going conventional.
As a recap, conventional mortgage rates are still at excellent historic levels if you have good credit and are refinancing lower than 80% of your home’s value. For those with poor credit and/or refinancing over 85% of your home’s value, FHA is the place to go for current low mortgage rates.
Take care, and Happy 4th of July!
May the Mortgage Rates be with You!
Refinance Tool Box
It seems that mortgage lenders are still sitting on the fence and hoarding as much cash as possible. In fact, the lender spread premium in mortgage rates for shorter term 20 year, 15 year, 10 Year, and assorted 1 to 10 Year ARM mortgages have increased steadily in the previous three weeks.
There is little for lenders to get excited about as unstable home values, credit liquidity concerns, and inflation hold center court with little positive news as of late. Simple supply and demand tells us that lenders can charge a higher yield on mortgage rates because they have little worry about competition for your mortgage.
Fortunately for those that enjoy low mortgage rates, the treasury yields are at such a low level that we are still experiencing near historic low mortgage rates, despite the non-historic high lender spread.
Now, these historic low mortgage rates do not apply to everyone. As the loan-to-value ratio heads above 80% to the 95% level, lender spreads and mortgage rates are increasing significantly. In my opinion, FHA home loans will be the best bang for your buck if you are refinancing at over 85% LTV. FHA mortgage rates are still at excellent levels for those high equity loans and should at least be checked out before blindly going conventional.
As a recap, conventional mortgage rates are still at excellent historic levels if you have good credit and are refinancing lower than 80% of your home’s value. For those with poor credit and/or refinancing over 85% of your home’s value, FHA is the place to go for current low mortgage rates.
Take care, and Happy 4th of July!
May the Mortgage Rates be with You!
Refinance Tool Box
posted by Jim Bisnett at
7:41 PM
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