FHA conforming loan interest rates hit record lows again for the week ending 7/17/2020

Mortgage interest rates for buying a home on the Palos Verdes Peninsula declined to new record lows this week for conforming loans but remain higher to jumbo loans . The following are excerpts from the newsletter on interest rates published by HSH Associates :

“After flirting with the 3% mark for a number of weeks, mortgage rates finally eased enough to drop into the upper two percent range for the first time. To be most accurate, it is the average offered rate for a conforming 30-year fixed-rate mortgage as tracked by Freddie Mac that stepped below this mark; other mortgage types and terms have been available in the twos at other times. For example, the conforming 15-year FRM has already been there for a majority of 2020, and there have been over 100 weeks in the last decade where that has also been the case. As well, there have been over 200 weeks where a hybrid 5/1 ARM could have been had at an initial rate below three percent, not to mention formerly-popular other ARMs and mortgages with other terms at various points in time.

Still, it’s a noteworthy achievement, even if the difference on a $200,000 loan made at the new record loan (2.98%) compared to the previous record low (3.03%, just a week prior) creates a payment difference of about $5 per month. While welcome, that five dollars doesn’t much change the homebuying or refinancing equation for consumers.

It also bears remembering that while Freddie Mac’s data is a benchmark, but only for a select slice of potential borrowers — those with great credit, who can make a substantial down payment, fully document their income and assets and meet other underwriting criteria. For potential borrowers who can’t meet these requirements, those whose credit isn’t stellar, who have smaller down payment or equity stakes or can’t meet documentation standards, mortgage rates are still likely low but may or may not be at record lows.

There may be a lot of difficult issues with which to contend, both happening currently and expected to come, but at least we have low mortgage rates, which are a blessing (for some) as a result of a curse (for all). In the week of July 10, applications for mortgages flared higher by 5.1%; applications for purchase-money mortgages slid by 6.1% for the week, but refis more than made up for that decline, powering 11.9% higher for the period. With headlines of never-before-seen rates everywhere in recent days, refi activity will likely be set to climb again, much to the delight and chagrin of lenders who welcome the business even as they are struggling again to keep up with demand. Lower rates can’t much help the purchase market, though, as they simply serve to incite more demand into a market of limited supply. Simply said, low rates are great, but won’t put more homes on the market, and may serve to lift prices further for those that are.

Next week comes a light calendar of data, but we’ll see if falling mortgage rates in May, June and July have improved existing and new home sales. Since both were beaten down pretty well, existing home sales will likely pop a great deal higher, while new home sales will build on June’s rebound. As far as mortgage rates go, we’re shaping up to see another record low next week, as the average offered rate for a conforming 30-year FRM as reported by Freddie Mac will likely drift down another 3 basis points or so.

The following are interest quotes:

Allen Bond, Wells Fargo

Conforming
Loan Type MI Type Interest Rate APR
30-yr fixed Conforming 3.125% 3.214%
15-yr fixed Conforming 2.625% 2.749%

Jumbo
Loan Type MI Type Interest Rate APR
7/1 ARM Jumbo 2.625% 2.746%
30-yr fixed Jumbo 3.250% 3.305%

John Alvin, American California Financial