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Mortgage Rates Continue Upward Trend this Week: 30 Year Rates Almost at 4.50%

Mortgage Rates Continue Upward Trend this Week: 30 Year Rates Almost at 4.50%

Mortgage Rates Continue Upward Trend This Week 30 Year Rates Almost at 450Mortgage rates continued the upward trend which started over a month ago when 10 year bond yields started moving sharply higher. After one week of declines, 30 year fixed conforming mortgage rates moved sharply higher to 4.36 percent, an increase of 30 basis points since last week. We look for rates to continue moving higher since 10 year bond yields moved above 2.50 percent recently and were as high as 2.62 percent yesterday.

Mortgage Rates Increase This Week

The days of record low mortgage rates are over for this economic cycle and we probably won't ever see rates as low again in our generation. That is unless there is another deep recession or depression to force the Federal Reserve to cut the fed funds rate all the way down to zero percent. Mortgage rates today are above record lows but rates are still low historically speaking so now is still a good time to buy a home or refinance a loan.

When you're applying for a loan, you'll probably be subjected to more stringent loan requirements than you would have a few years ago. You'll also have to provide more documentation when going through the approval process than you did back during the housing bubble. There are also reports that some lenders are requiring some rather bizarre information when applying for a mortgage loan.

Bizarre Loan Documentation Requests from Mortgage Lenders

There was a recent article in the Chicago Times that showed one applicant having to provide a doctor's note to a lender. This is not a joke. The lender wanted the borrower to provide a doctor's note showing the borrower was cured of an illness and that the illness would never come back. Another borrower deposited a couple of hundred dollars into an account from a garage sale and was asked to provide proof an ad for the garage sale.

Mortgage Lending Standards are Finally Loosening

Although these two examples are rather odd, lenders have gotten more stringent with standards since the housing bust and are finally starting to ease up on lending standards again. EllieMae reported the average credit score on closed loans (loans that were made to borrowers) was 743, up from last month's average of 742 but down from late last year when the average was 750.

Average Mortgage Rate on Closed Loans Move Higher

In EllieMae's Origination Insight Report for May 2013, the average 30 year mortgage rate on closed loans fell to 3.747 percent in May, down from April's average of 3.808. Mortgage rates today on 30 year conventional loans are well above these average rates and wont be that low again. 

Current mortgage rates on 30 year loans are at 4.36 percent and will move above 4.50 percent this week. Today's mortgage rates on 15 year conventional loans are averaging 3.42 percent, up from the previous week's average 15 year mortgage interest rate of 3.27 percent. 15 year rates were below 3.00 percent for most of 2013 but those days are gone for now. We expect 15 year rates to move above 3.50 percent this week.

Author: Brian McKay
June 25th, 2013