Jeff Cost

Cincinnati Home Loan

30-Year Fixed Rate Mortgage Rates Fall To 3.62% Nationwide

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30-year fixed rate mortgage rates30-year fixed rate mortgage rates made new, all-time lows once again this week.

According to Freddie Mac’s weekly mortgage rate survey of more than 125 banks nationwide, the average 30-year fixed rate mortgage rate fell 4 basis point to 3.62% nationwide.

The rate is available to conforming, prime borrowers willing to pay an accompanying 0.8 discount points plus a full set of closing costs. A “prime” mortgage applicant typically has excellent credit, verifiable income, and at least 25% equity in their home.

And, it’s not just the 30-year fixed rate mortgage that made new lows in this holiday-shortened week, either. The 15-year fixed rate mortgage did, too, falling 5 basis points to 2.89%, on average.

The 15-year fixed rate mortgage requires 0.7 discount points plus closing costs.

Discount points are a one-time, up-front closing cost, based on loan size. If your loan requires 1 discount point, that means that your loan has a closing cost equal to 1 percent of your loan size. If your loan requires two discount points, the fee would be equal to two percent of your loan size; and so on.

So, based on this week’s Freddie Mac survey, a home buyer in Cincinnati opening a $200,000 mortgage and paying 0.8 discount points would face to a one-time $1,600 fee to be paid at closing.

The good news is that discount points are optional. 

To avoid paying discount points, simply ask your lender for a “zero points” loan. You’ll get a higher mortgage rate than what Freddie Mac shows in its survey, but you’ll pay fewer closing costs.

Today’s low rates are terrific for both home buyers throughout Kentucky and existing homeowners looking to make a refinance. As compared last year at this time, mortgage rates are down by 98 basis points — nearly one full percentage point.

Mortgage payments are much lower today as compared to July 2011 : 

  • July 2011 : $512.64 principal + interest per $100,000 borrowed
  • July 2012 : $455.77 principal + interest per $100,000 borrowed

Today’s rates yield an 11 percent payment discount as compared to last year.

Mortgage rates are unpredictable so there’s no guarantee that low rates will last forever, much less through the summer. If today’s rates meet your household budget, consider locking something in.

Mortgage Rate Risk Ahead Of Friday Morning’s Jobs Report

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Non-Farm Payrolls Since July 2010

Friday morning, the Bureau of Labor Statistics will release its Non-Farm Payrolls report. More commonly called “the jobs report”, Non-Farm Payrolls is a monthly market-mover.

Depending on the strength — or weakness — of the data, mortgage rates will change. Perhaps sharply. Unfortunately, we can’t know in which direction.

If you’re actively shopping for a mortgage in Cincinnati , therefore, today may be a prudent day to lock a mortgage.

The job report’s connection to mortgage rates is straight-forward. As the number of U.S. citizens earning paychecks increases, reverberations are felt through the economy.

First, higher levels of income are tied to higher levels of consumer spending and consumer spending accounts for the majority of the U.S. economy. More working citizens, therefore, builds a larger overall economic base.

Next, as the overall economic base grows, businesses produce and sell more goods, necessitating the hiring of additional personnel and the purchase of more raw materials — both positives for the economy.

And, lastly, as more paychecks are written, more taxes are paid to local, state and federal governments. These taxes are often used to fund projects and purchase goods and services which, in turn, grow the economy as well.

Tying it all together, the health of the U.S. economy is a major factor is setting day-to-day mortgage rates across Ohio. This is why rate shoppers face risk with tomorrow’s Non-Farm Payrolls report.

Between 2008 and 2009, the economy shed 7 million jobs. It has since recovered 3.9 million of them and, Friday, analysts expect to see another 100,000 jobs created in June. If the actual number of jobs created exceeds this estimate, look for mortgage rates to rise. 

If the actual number of jobs created falls short of 100,000, mortgage rates may fall.

The government releases Non-Farm Payrolls data at 8:30 AM ET Friday.

Pending Home Sales Index Hits A 2-Year High

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Pending Home Sales IndexHomes are going under contract at a quickening pace.

In May, for the second time in 3 months, the Pending Home Sales Index crossed the 100 barrier, stretching to 101.1. A “pending home sale” is a home under contract to sell, but not yet sold.

Statistically, the Pending Home Sales Index reading is significant for two reasons.

First, the index’s reading is at its highest since April 2010. From this, we infer that today’s pace of home buying in Kentucky and nationwide is approaching the “stimulated” levels of two years ago — but without the federal stimulus.

This is a positive signal for the housing market.

Second, because the Pending Home Sales Index is a relative index; and, because it was assigned a value of 100 upon its inception in 2001, readings higher than 100 imply that the housing market is performing better than it did during the index’s first year.

2001 happened to be a strong year for housing. 2012, it seems, is shaping up to be a better one.

And, there’s another reason why the Pending Home Sales Index matters so much to buyer and sellers of Cincinnati — the Pending Home Sales Index is among the few “forward-looking” housing market indicators.

Rather than report on how the housing market looked 30-60 days in the past, as the Case-Shiller Index does; or the Existing Home Sales report, the Pending Home Sales Index looks 30-60 days to the future.

80% of homes under contract sell within 2 months so, as the Pending Home Sales Index goes, so goes housing. Based on May’s data, therefore, we can assume that home sale figures will rise through the summer.

If you’re shopping for homes right now, consider going under contract while the market remains somewhat soft. Mortgage rates are low and so are home prices. It makes for good home-buying conditions.

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