September 25 Mortgage Market Update

The mortgage market remains challenging but home prices have decreased and interest rates remain low. It seems to be a great time to purchase in most markets. Most realtors that I work with have a large inventory of homes for sale with few buyers. This creates a buyer’s market.

· Well, the Fed lowered interest rates last week, by .50%, as anticipated. The prime rate followed and is now 7.75%, which is great news for anyone who has an adjustable mortgage or line of credit tied to prime. But, mortgage interest rates did not go down. It was thought by most experts that this move by the Fed was already priced into the mortgage market weeks ago and they were right. Conforming rates (for mortgages at or below $417,000) are holding steady in the low 6% range, if you don’t want to pay any points. You can always assume paying 1 point will buy your rate down by .25%, sometimes .375%.

· Jumbo mortgage rates (those above $417,000) still remain relatively high, as compared with conforming size loans. It is highly recommended to go with a 3, 5, or 7 year adjustable – which are still pricing very well at certain lenders.

· I am continuing to have success with FHA and VA loans for my customers who have credit issues and low scores. These programs require you to fully document your income and assets but offer extremely good interest rates considering the loans are not always straight forward. I’m also working with a lender that is very forgiving and will underwrite these loans when the more conventional FHA/VA lenders will not.

· The sub-prime mortgage market continues to be challenging and lenders continue to exit the industry. The banks that are offering these programs are charging very high interest rates so that they can remain profitable. If you are in this market due to your credit, I highly recommend exploring FHA first before taking a loan at 9+%.

Please keep in mind that I do offer a variety of commercial financing. If you own a business or are thinking about doing so, please call or email me so we can discuss your options. Please visit my website, www.stevehawkmortgage.com, if you haven’t already. Thank you for your time.