Fixed and ARM rates for loans up to $729k are even since last week, ending several weeks of .5% price swings. Rates on loans from $729k to $1m are also about even. Rates on loans above $1m are not shown below because that pricing is truly custom based on client profiles.
Only a few lenders have announced rates for the new super-conforming tier which will cap at $625,500 rather than $729,750 as of January 1. So far it looks like loans up to $417k will be about .25% cheaper than loans up to $625k.
For loans above $625,500, here are three things to watch for in the coming months: (1) by December 7, we find out if any appeals for higher super-conforming loan limits by region were successful, (2) there’s much talk of a new economic stimulus package that also might alter higher loan limits by region, (3) as lenders are forced to re-deploy their Treasury funds (instead of hoarding the free capital like they’re doing now), we will also see renewed competition for higher loan amounts—but we can also expect higher down payments as lenders compensate for any further home price declines.
Retail sales for October declined by 2.8% and the consumer looks weak going into the holiday shopping season. The economy has lost 1.2m jobs so far in 2008 and we’re at 6.5% unemployment, which many economists think could rise by 2%-2.5%. Not so extreme when we see that Citigroup announced 53,000 job cuts, UBS is eliminating bonuses, and more financial and auto firms are likely to follow.
The big economic reports for this week are Producer Prices Tuesday (manufacturing inflation), Consumer Prices (consumer inflation) and October Housing Starts Wednesday, and the Philadelphia Fed Index Thursday (manufacturing activity). There’s also a raging debate in Congress about whether US auto firms should receive Treasury bailout funds.
I am less informed about auto firms than financial firms, but Treasury and the Fed have repeatedly said that rescue measures are targeted at firms whose failure would cause systemic global economic meltdown. This is certainly the case with financial firms who have received TARP and Fed funds. But as far as I can see, non-US auto firms are still building competitive products, so failure of US auto firms would create larger unemployment, but would it cause an economic meltdown?
This question will have to be answered by the Obama administration, because the Bush administration said today that they will not approve allocation of any more TARP funds—of which there is an estimated $350 billion left.
Conforming ($200,000 – $417,000) – NO POINTS
30 Year: 6.25% (6.36% APR)
15 Year: 6.0% (6.11% APR)
5/1 ARM: 6.375% (6.49% APR)
Super-Conforming ($417,001 to $729,750 cap by county) – NO POINTS
30 Year: 6.625% (6.72%)
Jumbo ($729,751 – $1,000,000) – NO POINTS
30 Year: 7.25% (7.36% APR)
10/1 ARM: 6.4% (6.51% APR)
5/1 ARM: 6.3 % (6.41% APR)