Here’s another way borrowers can be tripped up by the financial industry.

Codi is based on short-term borrowing costs, which have fallen significantly since the Federal Reserve and other central banks cut interest rates and flooded the economy with cheap money. Cosi includes long-term CDs that are paying higher yields, keeping Cosi elevated above Codi. Wells Fargo doesn’t publicly release the deposit portfolio used to calculate its index.

As home values drop and banks tighten standards, homeowners are finding it more difficult to refinance their mortgages. This is a result of the poor economy and also banks not being able to sell the loans off to the secondary market. In addition, easy high LTV loans obtained in the bubble are no longer acceptable to the banks as credit standards increase and property values drop.

Nevertheless, only half as many refinancing applications were reported last week than were reported at the beginning of January, the peak level for the year. The total dollar volume of refinancing activity in 2009 will be about $1 trillion. In 2003, another year when rates fell, it was $2.8 trillion…Banks say they are under pressure from regulators to raise their cash reserves, which means fewer loans.

Even for conforming loans , only a small proportion has been refinanced.

The Home Affordable Refinance Program, known as HARP, was designed to benefit between four and five million homeowners whose loans exceeded the value of their property by as much as 5 percent. But as of Sept. 30, only 116,677 loans had been refinanced.

Over the past several weeks, mortgage rates have been going down. Even jumbo rates are down significantly.
as of 10/02/2009 02:59 AM Eastern
Product Interest Rate APR
Conforming 1and FHA Loans
30-Year Fixed 4.875% 5.065% Down 0.125
30-Year Fixed FHA 5.000% 5.717% Down 0.5
15-Year Fixed 4.250% 4.573% Down 0.25
5-Year ARM 3.750% 3.765% Down 0.375
5-Year ARM FHA 3.750% 3.342% Down 0.5
Larger Loan Amounts in Eligible Areas – Conforming and FHA.1
30-Year Fixed 5.000% 5.138% Down 0.125
30-Year Fixed FHA 5.250% 5.924% Down 0.25
5-Year ARM 4.000% 3.806% Down 0.375
Jumbo1 Loans – Amounts that exceed conforming loan limits1
30-Year Fixed 5.750% 5.895% Down 0.625
5-Year ARM 5.000% 4.176% Down 0.125

Conforming Loan limits and FHA Loan limits expiry date

For all in the housing market, Dec 31 2009 is the date to keep in mind because that’s when the conforming loan limits revert to pre-housing crisis levels. When that lifeline is removed and likely not reinstated, the market will have to stand on its own feet.

In Cupertino, essentially all loans will revert to jumbo rates on Jan 1 2010.

February 24, 2009

MORTGAGEE LETTER 2009-07

TO: ALL APPROVED MORTGAGEES

SUBJECT: Loan Limit Increases for FHA

This Mortgagee Letter provides information on Federal Housing Administration (FHA) single family loan limits that have changed as a result of the American Recovery and Reinvestment Act of 2009 (ARRA) signed into law on February 17, 2009. These limits are effective for those loans for which credit is approved in calendar year (CY) 2009 and will remain in effect until December 31, 2009.

FHA Single Family Programs Affected:

The loan limits described in this Mortgagee Letter are effective for those mortgages insured under the following Sections of the National Housing Act: 203(b)(FHA’s basic 1-4 family mortgage insurance program – including individual condominium units), 203(h)(mortgages for disaster victims), and 203(k)(rehabilitation mortgage insurance).

FHA loan limits for Section 255, Home Equity Conversion Mortgages (HECM) are effective immediately for those loans closed on or after the date of this mortgagee letter. Further instructions for HECM loan limits are set forth below.

Revisions to Current Limits:

Under ARRA, the revised FHA loan limits for 2009 will be set at the higher of the loan limits established for 2008 under the Economic Stimulus Act of 2008 (ESA) or those established for 2009 under the Housing and Economic Recovery Act of 2008 (HERA).

(more…)

Conforming loan rates continued decreasing , down up to half a percent from two weeks ago but jumbo rates did not follow and edged up instead.
as of 07/13/2009 03:30 AM Eastern
Product Interest Rate APR
Conforming1and FHA Loans
30-Year Fixed 5.000% 5.191% Down 0.375
30-Year Fixed FHA 5.500% 6.245%
15-Year Fixed 4.500% 4.826% Down 0.375
5-Year ARM 4.125% 4.064% Down 0.5
5-Year ARM FHA 4.250% 3.655% Down 0.25
Larger Loan Amounts in Eligible Areas – Conforming and FHA.
30-Year Fixed 5.125% 5.264% Down 0.375
30-Year Fixed FHA 5.500% 6.187% Down 0.25
5-Year ARM 4.375% 4.106% Down 0.5
Jumbo2 Loans – Amounts that exceed conforming loan limits1
30-Year Fixed 6.375% 6.525% UP 0.125
5-Year ARM 5.125% 4.387%

In two weeks, fixed conforming and FHA loan rates dropped 0.5 percent pretty much across the board in the continued yo-yo-ing of rates. Where is this mortgage rate volatility coming from ? One possibility is that financial institutions are still extremely wary of holding on to these securities for any period of time so market volatility is not being filtered anymore and showing up directly in rates.

Jumbo remains largely unchanged.
as of 06/26/2009 03:30 AM Eastern
Product Interest Rate APR
Conforming1and FHA Loans
30-Year Fixed 5.375% 5.571% Down 0.5
30-Year Fixed FHA 5.500% 6.245% Down 0.5
15-Year Fixed 4.875% 5.204% Down 0.5
5-Year ARM 4.625% 4.331% Down 0.375
5-Year ARM FHA 4.500% 3.790% Down 1.125
Larger Loan Amounts in Eligible Areas – Conforming and FHA.
30-Year Fixed 5.500% 5.643% Down 0.5
30-Year Fixed FHA 5.750% 6.451% Down 0.5
5-Year ARM 4.750% 4.326% Down 0.5
Jumbo2 Loans – Amounts that exceed conforming loan limits1
30-Year Fixed 6.250% 6.399% Down 0.125
5-Year ARM 5.125% 4.468%

The name of the game in recent weeks has been the incredible rising mortgage and Treasury rates. Another week goes by with 0.25-0.375 percent increases in Wells Fargo mortgage rates.
Wells also dropped the 40 and 20 yr fixed loans.
as of 06/10/2009 04:34 PM Eastern
Product Interest Rate APR
Conforming and FHA Loans
30-Year Fixed 5.875% 6.077% Up 0.25
30-Year Fixed FHA 6.000% 6.773%
15-Year Fixed 5.375% 5.709% Up 0.25
5-Year ARM 5.000% 4.553% Up 0.375
5-Year ARM FHA 5.625% 4.619%
Larger Loan Amounts in Eligible Areas – Conforming and FHA.
30-Year Fixed 6.000% 6.147%
30-Year Fixed FHA 6.250% 6.976%
5-Year ARM 5.125% 4.549%
Jumbo Loans – Amounts that exceed conforming loan limits
30-Year Fixed 6.375% 6.525%
5-Year ARM 5.125% 4.549%
Government borrowing is to blame for the recent increase as 10yr Treasury rates reach 4 percent.
Treasuries fell, pushing 10-year yields to the highest level since October, as the government sold $19 billion of the securities and Russia said it may switch some reserves from U.S. debt.

FHA loans jumped to 6 percent up 0.5 after being at 5.5 for a long while. 5 yr ARM also jumped half a percent. The volatility of mortgage rates are unheard of previously and seem to indicate how little risk banks are willing to take.
as of 06/05/2009 04:45 PM Eastern
Product Interest Rate APR

Conforming1 Loans
40-Year Fixed 6.750% 6.954%
30-Year Fixed 5.625% 5.846% Up 0.125
20-Year Fixed 5.750% 6.048% Up 0.125
15-Year Fixed 5.125% 5.494% Up 0.125
5-Year ARM 4.625% 4.352% Up 0.5
Jumbo2 Loans – Amounts that exceed conforming loan limits1
30-Year Fixed 6.375% 6.525%
5-Year ARM 5.125% 4.468%
FHA – loan limits vary by county.
30-Year Fixed 6.000% 6.696% Up 0.5

Will the fed step in and purchase more mortgages or decide it has done enough to kick start the market ? Given the recent slight improvements in the economy and the apparent stabilization of the financial institutions, the latter becomes more probable.
As rates increase, the projected average lives of mortgage bonds and loan-servicing contracts extend as estimated refinancing drops, leaving holders with portfolios of longer- than-anticipated durations. Investors then may seek to pare durations by selling longer-dated Treasury securities, mortgage bonds and interest-rate swaps, sending yields even higher.
A further 0.25 percentage-point increase in loan rates will extend the durations of 30-year agency mortgage securities by the equivalent of $149 billion of 10-year Treasuries, the strategists wrote. Contracts in the entire loan-servicing market, where holders are even more apt to “actively hedge,” will extend by about $17 billion to $19 billion, they wrote.

Conforming loan and FHA loan rates have spiked half a percent or more in one week !!

as of 05/28/2009 02:45 PM Eastern
Product Interest Rate APR
Conforming1 Loans
40-Year Fixed 6.750% 6.954% Up 0.25
30-Year Fixed 5.500% 5.719% Up 0.625
20-Year Fixed 5.625% 5.922% Up 0.625
15-Year Fixed 5.000% 5.368% Up 0.5
5-Year ARM 4.125% 4.166% Up 0.25
Jumbo2 Loans – Amounts that exceed conforming loan limits1
30-Year Fixed 6.375% 6.525%
5-Year ARM 5.125% 4.468%
FHA – loan limits vary by county.
30-Year Fixed 5.500% 6.170% Up 0.5

Practically, an across the board increase of 0.125 percent in rates since the last update May 20 2009. This is to be expected with the recent increases in Treasury bond rates.
as of 05/22/2009 02:45 PM Eastern
Product Interest Rate APR
Conforming1 Loans
40-Year Fixed 6.500% 6.700%
30-Year Fixed 4.875% 5.086% Up 0.125
20-Year Fixed 5.000% 5.289% Up 0.125
15-Year Fixed 4.500% 4.862% Up 0.125
5-Year ARM 3.875% 3.993% Up 0.125
Jumbo2 Loans – Amounts that exceed conforming loan limits1
30-Year Fixed 6.375% 6.525% Up 0.125
5-Year ARM 5.125% 4.387%
FHA – loan limits vary by county.
30-Year Fixed 5.000% 5.645%