Tuesday, March 10, 2009

30 Year fixed remains under 5%!!!

The 30 Year fixed remains under the 5% threshold at 4.875%.. The yield has slipped somewhat, but still very solid. The discount to 4.5% has gone down slightly as well, to 1.674. Remember that the discount number shows up on the GFE in the 800 block as Discount Points, right under Origination Points. A point is 1% of the loan amount. Example: $200,000.00 x 1.674 in discount = $3348.00 charged to the borrower to get a 4.5% rate.

The 10 and 15 year terms are both very solid at 4.75%. Which is up compared to weeks past. A discount of 1.057 will yield a rate of 4.25%

$200,000.00 x 120 months(10 years)@ 4.75% = $2095.00 P&I payment

$200,000.00 x 180 months(15 years)@ 4.75% = $1556.00 P&I payment

$200,000.00 x 360 months(30 Years)@ 4.875% = $1058.00 P&I Payment

Short term money is not for everybody.

ARM money remains the best rates on the board Today at 4.25% for both the 3/1 and 5/1, no discount to a lower rate is available. With the 30 year fixed under 5%, it is case by case on whether your customer will benefit by the lower rate. As the 30 Year moves closer the short term money, it is doubtful that ARM's will be used much, except for specific loan scenarios. Either way, everyone benefits with cheap money, especially your customers.

Interest Only loans remain cheap, with the 3/1 and 5/1 at 4.25%. As I said yesterday, even the 30 Year fixed is attractive at 6.375%. Remember your customer will need to qualify for the full PITI payment, not just the IO payment. Interest Only loans work better for the higher loan amounts, rather that the 150k and under amounts.

$200,000.00 x 30 year fixed @ 5% = $1074.00 P&I, fully amortized

$200,000.00 x 30 year fixed @ 6.375% = $833.00 P&I Interest Only

Keep the IO loan scenario's in play if you have a payment buyer.

Jumbo money is ridiculous right now. There are a couple of niche players that are offering jumbo and super jumbo in the 5% range on ARM money, but nothing fixed. LTV's and FICO adjustments remain restrictive. The minimum FICO scores are going up as well, with investors at 600 or 620 mid. Some investors are going above the 620 mid.

There is simply no appetite for Risk.

Government money remains steady at the 5% level for both FHA and VA. ARM money mirrors the conforming money at 4.25%. You or your company should have a separate marketing plan for the First Time Homebuyer market. Understandably the market is very tough right now, however this may be the best buying opportunity for this market, EVER.

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