Mortgage Rates Report

Mortgage rates for June 30, 2008.  Loan amounts up to $417,000:

3/1 ARM              5.250%
5/1 ARM              5.500%
7/1 ARM              5.750%
10/1 ARM            5.875% 

All rates offered to the borrower with 1 point cost.  Rate quotes assume a purchase transaction with a 20% down payment, 720 credit score, and full income qualification.  Rates are subject to fluctuation.  Custom rate quotes and fixed rate mortgages are available by calling at the number below.

MORTGAGE RATE TREND:

Next 7 days:       Slightly Lower

Next 30 days:     Slightly Higher

Next 3 months:   Higher

Brian Brady
(858)-777-9751
Apply for a loan online

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No recommendation until tomorrow.  All eyes are on the Federal Reserve Open Market Committee today.  At 2:15PM (EDT), 11:15 (PDT), they will release their interest rate decision and statement.  The fixed income securities market believe there is a 43% chance that the Fed will RAISE rates, to stifle inflation, in August and that there is a 61% chance that the hike will come in November.

The eyes will be on the Fed's commentary, though:

"We expect the Fed to keep the funds rate at 2% today but to shift to a more hawkish statement by placing more emphasis on inflation over growth risks," strategists at Credit Suisse wrote in a research report. "The Fed will likely use this meeting as an opportunity to set the stage for a potential rate rise in August."

If the Fed signals that rates could rise as early as August, expect mortgage rates to jump .25% higher, from today's 6.375% 30 year fixed rate, over the next few weeks.  If the Fed signals rate hikes are "possible" as a way to fight inflation, expect rates to stay level through in July (6.25% to 6.5%).  Finally, if the Fed shifts back to its anti-recessinary talk, we could see rates drop down to 6%.

As you can see, there are a lot of "ifs".  This is why today's Fed commentary is all important.  The Fed's ambiguity has traders convinced that higher rates are a foregone conclusion.  Here's the silver lining hidden in this dark cloud; mortgage rates are equal to what they were in July, 2007.  The Fed Funds rate was at 5.25%, then.  Today, the Fed funds rate is at 2.25%.  What that means is that mortgage rates SHOULD be able to withstand some 5-6 rate hikes and stay under 7%.

Alas, markets are discounting mechanisms.  We still think there is a lot of risk to higher mortgage rates until the commodities bubble bursts.

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We're still advising all borrowers to lock all mortgage rates at application. The risk of the Fed raising rates far exceeds the opportunity for lower term rates. Watch this one minute video to understand what exactly has been happening in the mortgage markets, since May 2, 2008 and what I think WILL happen in June and July, to mortgage rates.

Brian Brady Mortgage Planner 858-777-9751

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Brian.Brady 1 feedback »

Mortgage rates are headed higher.  Lock all rates at application, regardless of closing date.

The trend is clear; the Fed believes it has done all it can to stave off the banking crises and is now focusing its efforts on inflation.  This morning, retail sales were up and the dollar is strengthening.  If stagflation is the fear, the current strategy of targeting core inflation may be abandoned for the more radical Paul Volcker-style approach to tame inflation. 

While I believe the higher mortgage rate cycle will be shorter than the 80-s style interest rate hikes, it's clear to me that Bernanke is talking differently than he did in 2006 and 2007.  The effect?  We could see mortgage rates rise as much as 2% in the next two years.  I still believe that a five year ARM will offer the best solution because interest rates move in cycles; I think we'll see mortgage rates under 6% again in 2011.  Today?  The trend looks like we're headed higher.

What then, should be your strategy?

1- If you were thinking of refinancing your home loan, apply now.  There will be little periods of weakness in rates this year and you should jump on any chance you have to get a 5/1 ARM under 6% or a 30 year fixed rate under 6.5%.

2- If you can't get the home loan you want today, get your documentation to me anyway. Secure an approval that is good for 90 days and wait for those periods of weakness to lock in the right rate.

3- If you were thinking of buying a home, mortgage rates are about as good as they'll get for the next two years.  Get pre-approved, contact your REALTOR and start looking.

Brian Brady

(858)-777-9751

brian(at) californialoanconnection (dot) com

For faster service, apply online, fax your most recent paystub, 2007 and 2006 W-2 form, and most recent bank statement to 858-605-4230, and call me immediately.

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Brian.Brady 5 feedbacks »