Mortgage rates have headed generally lower in the past few days following the S&P downgrade of U.S. debt. They’ve headed lower over the past few weeks for what is essentially the indictment issued by the S&P: there is a lack of general economic confidence largely due to their being a very specific lack of confidence in the abilities of our elected officials to agree, let alone define policies that would encourage growth. We’re seeing volatility in mortgage rates that is nearly unprecedented. During yesterday’s trading session, the market swung nearly 275 basis points. To put this in context, a 20-25 basis point swing in a day used to be a moderately volatile day. This volatility isn’t going away anytime soon and will create a unique way that we’re going to be evaluating loans for first time home buyers.

Mortgage rates are if you are talking normal rates like FHA and conventional or state sponsored programs. That’s because they get their money from different spots. A normal FHA or conventional loan is getting its funding based on what is happening in the market that day. When the market is volatile and changing, so too are mortgage rates for the FHA and conventional products. State programs are different. They tend to sell a bunch of bonds at one time. Then the mortgage rate is set for that state program until they run out of money and have to sell another bunch of bonds. State mortgage program rates vary based on when the state raised the money. FHA and conventional loans vary based on when you lock the mortgage rates. Among other factors, just that difference in when they sold their bonds can explain some differences between Florida home buyer programs and Oregon home buyer programs

Categories : Lora's Posts