WeeklyBasis 12/04/06: Dec 06 Rates Better Than Dec 05

Fixed rates are .25% better today than they were in early-December 2005, and ARM rates are the same. This should provide some much needed perspective. Even though Fed rate hikes have impacted mortgage rates and the housing market this year, 10-year Treasury yield is at exactly the same level now as it was last December. The Fed Funds Rate and 10-yr Treasury yields are broad benchmarks for all types of business and consumer rates, but the most important and precise proxy for intermediate ARMs and 30yr fixed mortgages are mortgage bond yields. This is an indication that the open market doesn’t believe the economy is as strong as the Fed believes, and for now, this means lower rates for borrowers. This conflict will play out over the next couple months, but for now, we’re ending the year even. The most important data this week comes Friday with the November jobs growth report and consumer sentiment. If these reports are as weak as the economic data from the past 2 weeks, rates would drop lower. But I am going to bet that rates will stay about even. Also, conforming loan amount limits for 2007 have been announced, and they will remain at their $417,000 cap.

Conforming ($200,000 – $417,000) – NO POINTS
30 Year: 5.875% (6.015% APR)
10/1 ARM: 6.125% (6.265% APR)
5/1 ARM: 6.0% (6.15% APR)

Jumbo ($417,001 – $650,000) – NO POINTS
30 Year: 6.25% (6.39% APR)
10/1 ARM: 6.25% (6.39% APR)
5/1 ARM: 6.0% (6.15% APR)