Mortgage Rate Forecast: April 2008

Mortgage Commentary

We have plenty of economic news this week including the Consumer Confidence Index, first quarter's GDP and a Fed meeting. Wednesday should be the biggest mover for rates. Since the market already expects the Fed to cut rates and GDP to show a very small annual increase, any deviation from expectations will likely push mortgage rates higher.

The first report comes late tomorrow morning when the Consumer Confidence Index (CCI) for April will be released. This Conference Board index is a key indicator of future spending by consumers. The group surveys 5000 consumers from across the country about their personal financial situations. If sentiment is strong or rising, it is believed that consumers are more apt to continue to spend. However, if they are concerned about issues such as job security and investments, they will probably delay making large purchases. The latter is better for the bond market and mortgage rates because the expected slowdown in spending would ease inflation concerns. But, a sizable increase could hurt the bond market, pushing mortgage rates higher Tuesday.

Wednesday brings us the release of two important reports along with the FOMC meeting results. The first is the preliminary version of the 1st Quarter Gross Domestic Product (GDP). This is arguably the single most important report that we see on a regular basis. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best indicator of economic growth or contraction. I expect this report to cause major movement in the financial markets Wednesday and therefore the mortgage market also. Analysts are expecting to see output at an annual rate of 0.4%. A larger increase would almost certainly cause inflation concerns in the bond market that would push mortgage rates higher Wednesday morning.

This week's FOMC meeting will begin tomorrow but will not adjourn until Wednesday afternoon. It will likely adjourn with an announcement of another rate cut to key short term interest rates. Just how much of a reduction is open for debate. Look for another round of volatility following the 2:15 PM ET post-meeting statement.

Overall, look for plenty of movement in the financial markets and mortgage rates this week. Wednesday or Friday will likely be the most important day of the week with the GDP and Employment numbers being posted along with the FOMC adjournment, but we may see noticeable changes to rates tomorrow also.

Search today's mortgage rates anonymously. And, as always, you can call me at (508) 471-4144 with any questions about mortgage rates and to discuss your best loan options.

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	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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PLEASE READ: Effective 5/5/2008, one of the largest Private Mortgage Insurance (PMI) companies will no longer provide mortgage insurance for loans with less than a 5% down payment. Look for other companies to follow shortly. This will leave FHA as the only 3% down payment loan around. For the most part, 100% financing is already gone with very short list of exceptions. If you have questions or are confused about what types are financing are still truly available, please give me a call.

Current Rates*:  

• 30 Year Fixed - 6.25% with Zero Points
• Jumbo 30 Year Fixed - 7.625% with .5 Points
• 15 Year Fixed - 5.875% with Zero Points
• FHA / VA 30 Year Fixed - 6.25% with Zero Points
  
  *Rates and fees accurate as of 4/25/08. Rates and fees subject to change without notice.  This is not an advertisement for the purposes of the Truth-in-Lending Act or Regulation-Z. Terms and conditions apply. For qualified borrowers. Not a promise to lend.

Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on qualification criteria from program to program. If you like the rate today, the safe bet is to lock. Even if rates improve, they wouldn't improve enough in the short term to make you cry about it. But if you are an ardent market bear, and accept the risk of negative mortgage headlines, and believe the economy will just get more bad news next week, and you have the money to risk, you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking and then watching rates get a little better.

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	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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Looking Back

Mortgage interest rates rose again last week on better than expected earnings reports and decreased expectations as to the size of this week's Fed rate cut. Many now believe that they will only cut the rate by 0.25%, instead of the 0.50% from earlier predictions.

New home sales plunged 8.5% in March over the previous March, while sales of existing homes were down 2.0% over the same time frame.

Looking Forward

Look for investors to be keying on the Federal Open Market Committee (The FED) meeting Tuesday and Wednesday. While most are expecting another 1/4% rate cut, there is a growing number that believe that we may be better off if they don't do anything. The feeling is that doing nothing would be an indication that we have hit the bottom of the credit crisis, and that the economy is poised to rebound.

Why Are Lender Fees So Confusing?

One of the worst questions a consumers can ask when determining which mortgage company to use is "what are your closing costs?" Too often, when consumers are estimating what their closing fees are going to be, they ask the above question. While the good faith estimate is designed to prepare them for the expenses involved with purchasing real estate, some lenders have found a way to work this to their advantage.

Closing costs are broken into three broad categories; lender fees, pre-paids and escrows (taxes, insurance and interest), and title fees. Two of these three (pre-paids and title fees) will be the same, no matter which lender the consumer chooses. Only lender fees will vary. The problem arises when consumers fail to break these costs down. 

Example; A consumer calls two different lenders and is told by both that the closing costs will be around $4000. Lender A estimates that title and pre-paids will be around $3000 and lender fees to be $1000, while lender B estimates that title and pre-paids will be around $3500 and lender fees to be $500. In the end, because the title and pre-paids will be the same regardless of the lender, Lender B will actually end up being $500 cheaper.

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	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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Current home price trends indicate that home values continue to decline in many markets across the country, including eastern Massachusetts, Cape Cod and the Islands.  What does this mean?

When a property is located in an area that has been identified as in a declining market, Fannie Mae (FNAM) requires the lender to offer financing at loan-to-value (LTV) and combined loan-to-value (CLTV) ratios that are five percentage points below the maximum ratios allowed for the selected mortgage product.

What this means is, if a buyer is purchasing a property in a declining market and wants to put just 5% down (95 LTV), s/he will need to come up with another 5% for the down payment - for a total of 10% down. Instead of doing a 95 LTV, the maximum mortgage amount they'll be able to do is 90% of the purchase price of the home.

Appraisers are required to note whether a property is in a declining market or not. And, even if the appraiser doesn't make notation of it, mortgage lenders are also required to make due diligence to validate current housing trends and not rely solely on the information reflected in an appraisal. The application of the maximum financing in a declining market policy will not apply when the borrower has an existing Fannie Mae-owned or securitized first mortgage and is requesting a new limited cash-out refinance mortgage.

When the lender becomes aware that a property is in a declining market, the LTV for the mortgage loan must generally be adjusted to five percentage points below the maximum for the specific mortgage product. However, if the lender has evidence that the property is not located in a declining market, the lender may offer the maximum financing for the loan product. Should the lender choose to offer the maximum financing, the lender must be able to provide documentation that supports its assessment that the property is not located in a declining market.

On a positive note, the application of the maximum financing in a declining market policy does not apply when a borrower has an existing Fannie Mae-owned or securitized first mortgage, and is requesting a new limited cash-out refinance mortgage.

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	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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Mortgage Commentary

Rates kept their slight upward trend last week.  We don't expect any improvement this week either.  With inflation concerns growing and oil prices skyrocketing, investors will demand more for their money in the near-term, which means higher rates.  Don't expect significant relief as summer approaches.  Lock in your rate as soon as possible.

March's Durable Goods Orders will be posted early Thursday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for a small increase in orders. A smaller than expected increase could help boost bond prices and cause mortgage rates to drop Thursday morning. However, a stronger than expected reading would indicate that the manufacturing sector is gaining strength quicker than many had thought. This would be negative news and would probably help drive mortgage rates higher.

Overall, look for Thursday to be the most important day of the week with the Durable Goods report being posted and the Treasury auction.  The rest of the week will likely be heavily influenced by the stock markets.  If the major stock indexes continue to rally, bonds will likely suffer and mortgage rates will move higher. 

• If you have an adjustable rate or need to get cash out of your home, don't wait for rates to go up even more.
• If you have found the right home to buy, secure your financing today.

Visit me online so you can search current mortgage rates. And, as always, you can call me at (508) 471-4144 with any questions about mortgage rates and to discuss your best loan options.

---

	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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PLEASE NOTE: Effective 5/5/2008, one of the largest Private Mortgage Insurance (PMI) companies will no longer provide mortgage insurance for loans with less than a 5% down payment. Look for other companies to follow shortly. This will leave FHA as the only 3% down payment loan around. For the most part (with very short list of exceptions) 100% financing is already gone. If you have questions or are confused about what types are financing are still truly available, please give me a call.

Current Rates*:

• 30 Year Fixed - 6.25% with Zero Points
• Jumbo 30 Year Fixed - 8.0% with Zero Points
• 15 Year Fixed - 5.875% with Zero Points
• FHA /VA 30 Year Fixed - 6.125% with Zero Points
  
  *Rates and fees accurate as of 4/18/08. Rates and fees subject to change without notice.  This is not an advertisement for the purposes of the Truth-in-Lending Act or Regulation-Z. Terms and conditions apply. For qualified borrowers. Not a promise to lend.

Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on qualification criteria from program to program. If you like the rate today, the safe bet is to lock. Even if rates improve, they wouldn't improve enough in the short term to make you cry about it. But if you are an ardent market bear, and accept the risk of negative mortgage headlines, and believe the economy will just get more bad news next week, and you have the money to risk, you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking and then watching rates get a little better.

---

	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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Current Rates*:

• 30 Year Fixed - 6.0% with Zero Points
• Jumbo 30 Year Fixed - 7.625% with Zero Points
• 15 Year Fixed - 5.625% with Zero Points
• FHA / VA 30 Year Fixed - 5.875% with Zero Points
  
  *Rates and fees accurate as of 4/11/08. Rates and fees subject to change without notice.  This is not an advertisement for the purposes of the Truth-in-Lending Act or Regulation-Z. Terms and conditions apply. For qualified borrowers. Not a promise to lend.

Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on qualification criteria from program to program. If you like the rate today, the safe bet is to lock. Even if rates improve, they wouldn't improve enough in the short term to make you cry about it. But if you are an ardent market bear, and accept the risk of negative mortgage headlines, and believe the economy will just get more bad news next week, and you have the money to risk, you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking and then watching rates get a little better.

---

	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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Mortgage Commentary

We saw rates come down slightly last week, leaving the door open to lock in a good rate this week.  Much remains to be seen however, as this week brings us several relevant market reports as well as the start of the earnings announcements.  We will likely see swings back up in rates.  If you haven't done so, get you rate locked in now.

This week brings us the release of six relevant economic reports for the bond market to digest. We are also heading into corporate earnings season which could lead to fluctuations in the stock markets. If earnings come in lighter than estimates, the stock markets may fall, leading to an influx of funds into bonds. But, if earnings and forecasts are strong, the major stock indexes may rally, pulling funds from bonds and leading to higher mortgage rates. Some of the most influential companies don't report quarterly earnings for a few more weeks, but the early releases could affect optimism about what those big named companies' earnings will show.

Overall, look for the most movement in rates early in the week. The Retail Sales, PPI and CPI reports are the biggest names on the agenda. Any of the three can cause significant movement in the markets and mortgage rates, so please proceed cautiously if still floating an interest rate.

• If you have an adjustable rate or need to get cash out of your home, don't wait for rates to go up even more.
• If you have found the right home to buy, secure your financing today.

Visit me online so you can search current mortgage rates. And, as always, you can call me at (508) 471-4144 with any questions about mortgage rates and to discuss your best loan options.

---

	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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Mortgage Commentary

Rates remained fairly steady last week.  We hope, as many analysts do, that they remain steady this week as well.  However, since rates are on shaky ground, any negative news could push them higher in a flash. 

This week brings us the release of only two relevant economic reports in addition to the minutes from the last Federal Open Market Committee (FOMC) meeting and a Treasury auction. Both of the relevant reports are scheduled for release later in the week, so the most movement in rates may come the latter part of the week.

The final release of the week is the University of Michigan's Index of Consumer Sentiment at 9:45 AM ET Friday. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a decline from March's 69.5 reading.

Overall, I am proceeding into this week very cautiously. There are several variables that could make this week very quiet or quite rocky for mortgage shoppers. Tuesday's FOMC minutes could very well be a major market mover or a complete non-factor. Same goes for Thursday's auction. The truth is, the only day that I believe it is safe to say that we will see movement in rates is Friday as a result of the data being posted.

Visit me online so you can search current mortgage rates. And, as always, you can call me at (508) 471-4144 with any questions about mortgage rates and to discuss your best loan options.

---

	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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Current Rates*:

• 30 Year Fixed - 5.875% with Zero Points
• Jumbo 30 Year Fixed - 6.75% with Zero Points
• 15 Year Fixed - 5.50% with Zero Points
• FHA /VA 30 Year Fixed - 5.875% with Zero Points
  
  *Rates and fees accurate as of 4/4/08. Rates and fees subject to change without notice.  This is not an advertisement for the purposes of the Truth-in-Lending Act or Regulation-Z. Terms and conditions apply. For qualified borrowers. Not a promise to lend.

Interest rates are based on numerous economic, financial and credit based factors that adjust daily. In addition, lenders can vary on qualification criteria from program to program. If you like the rate today, the safe bet is to lock. Even if rates improve, they wouldn't improve enough in the short term to make you cry about it. But if you are an ardent market bear, and accept the risk of negative mortgage headlines, and believe the economy will just get more bad news next week, and you have the money to risk, you may benefit from floating. Just remember, it always seems more painful to have not locked when you should have as opposed to locking and then watching rates get a little better.

---

	Lew Corcoran, Sr. Mortgage Consultant Reverse Mortgages / FHA Loans / VA Loans USDA Rural Development Loans on Cape Cod and in Massachusetts Save on closing costs when you apply for a mortgage online ActiveRain Blog / Localism Mortgage Rate Forecast / New England Properties

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