Interest Rates Nudge Up

Interest rates havemoved up about a quarter of a percentage point over the last couple of weeks or so, Improving economic news including a lower unemployment rate, positive job creation, and the Federal Reserve’s ongoiing purchase program of Treasury securities, have combined toprovide pressure to increase interest rates. Some inflationary expectations are also causing the yield curve to show ncreases inyieldspreads between short term interest rates and longer term rates, thus indicating investor expectations of rising interest rates over time. The followingis an excerptfrom this week’s newsletter on interest rates from HSH Associates:

“Housing will eventually join the fray, but probably not for a while, and will likely be greeted with mortgage rates approaching what might be considered normal, somewhere around an average 6% for 30-year conforming loan rates. However, there are probably many months to go before that comes to pass. In the meanwhile an improving economy is making investors more interested in riskier investments with greater potential (i.e. the stock market) at the expense of safe-haven ones. As such, stock prices are rising and bond yields are following, and mortgage rates follow bond yields to a greater or lesser degree.

That should be the case as we wander into next week, with mortgage rates expected to move a little higher, probably a handful of basis points, perhaps as much as ten.:

The following are interest rate quotes from Al Hermann of American/California Financial Services,

The following are interest rate quotes from Jan Schott Bank of America, Home Loans [email protected] 310-802-2300:

Friday, February 4, 2011

Conforming 15/Year Fixed to $417,000

4.250% @ 0/pts

Conforming 30/Year Fixed to $417,000

4.875% @ 1.000/pt 5.125% @ 0/pts

Conforming High Balance 30/Yr Fixed to $729,750

5.000% @ 1.000/pt 5.250% @ 0/pts

Jumbo 5-Year Fixed ARM to $2,000,000

4.125% @ 1.000/pt 4.500% @ 0/pt

Jumbo 30/Year Fixed to $2,000,000

5.750% @ .500/pt 5.875% @ 0/pts

FHA Fixed to $729,750

5.000% @ .500/pts 5.250% @ 0/pts

Rates based on a Single Family Residence Purchase with 20% down, FICO score of 740 or greater, 30/day pricing. FHA is based on Single Family Residence Purchase with 3.5% down payment, FICO score of 620, 30/day pricing. Points are for Rate only. Standard Closing Costs apply. Rates not guaranteed and subject to change daily.