Jumbo Rates Still Surging / ARM's Too
A: Weekly Mortgage Report from Wells Fargo (hat tip Michael McGivney) shows falling 30YR fixed rates but rising ARM rates across the board. Any buyers out there care to report what they are seeing after talking to their mortgage lenders? Lets see how consistent this report is with other brokers doing lending business in Manhattan!
First, some charts via the Wells Fargo report. Here are weekly rates check, unfortunately it doesn't show jumbo rates, I'll get to that shortly.
Here is a chart showing Home Sales data as released by NAR.
Now, onto the Jumbo rates that are more in tune with reality here in the world of Manhattan real estate. Michael McGivney is reporting to me another surge in Jumbo Loan rates for 30YR fixed loan products reflecting the increasing risk seen by lenders towards the mortgage markets.
The exact quote from Michael is..."Jumbo rates are awful; 30 yr at 7.375% - 7.5% depending on LTV and credit. It is 0.125% higher than last week"
For all you that don't know, LTV is Loan-To-Value ratio. This is important because depending on how much you can put down, your rate quote can be lower or higher. Less money down means MORE risk for the lender and therefore a higher rate. More money down means LESS risk for the lender as the borrower is willing to take more equity in the transaction; this will give the borrower a better rate.
In addition, short term ARM product rates are rising because quite simply the risk is increasing for this type of loan product and fewer investors are willing to buy these riskier loan products on the secondary mortgage markets. That means lenders may be stuck holding the bag and that is something some don't want to do. According to the report:
Treasury yields dropped on AUG 30th as investors fled asset backed commercial paper in favor of the safety of government debt. The credit market situation is becoming quite unpredictable, with reports coming out almost every day detailing further ills for companies and the market as a whole. The housing market remains in a deep slump while consumer confidence is waning. We expect these factors to keep downward pressure on long-term mortgage rates in the near term. However, shortert-term ARM rates rose sharply this week and will carry upside risk as liquidity has dried up for these riskier mortgage instruments.
Great stuff from the inside trenches of the lending world here in Manhattan. WHAT ARE YOU BUYERS SEEING OUT THERE WITH RATE QUOTES? IS THIS REPORT ACCURATE OR OFF?
Posted by Steve
Tue Sep 4th, 2007 12:53 PM
Noah,
According to Bankrate, jumbos are down from last week as a matter of fact all rates are down today versus last week.
LOAN TYPETODAY +/- LAST WEEK
30 yr fixed mtg 6.10 % 6.12%
15 yr fixed mtg 5.77 % 5.79%
5/1 ARM 6.13 % 6.21%
30 yr fixed jumbo mtg 7.11 % 7.18%
5/1 jumbo ARM 6.55 % 6.60%
Posted by withheld
Tue Sep 4th, 2007 12:57 PM
I'm trying to get a commitment from citibank and despite staying BELOW jumbos and offering them a 50% LTV ratio or better, they are making me jump through hoops.
The rate is probably going to end up fine but it feels like there is a real risk they will say no if I don't prove the right income etc etc etc.
And thats with 400k sitting in THEIR savings account.
I'm actually ok with this, it is a nice change from getting a huge loan if you can fog a mirror.
Posted by Noah
Tue Sep 4th, 2007 01:18 PM
Well bankrate.com is more the greater NY area and I find their rates to be far lower than what is actually quoted here in Manhattan for jumbos. After all, most loans here are jumbos.
As far as what WITHHELD says, unreal! Its amazing how quickly we changed from no standards to tight standards!
Thanks guys for comments.
Posted by Susan
Tue Sep 4th, 2007 02:16 PM
HSBC's quotes today:
Rate One time Fee
7.625% .875%
7.75% .625%
7.875% .50%
8.0% .375%
8.125% .25%
8.25% .125%
8.375% 0
Posted by anonymous
Tue Sep 4th, 2007 02:19 PM
last week wells fargo was showing 6.375% on a non-jumbo 30 year fixed. today it's back to 6.5%....
Posted by Noah
Tue Sep 4th, 2007 02:42 PM
Susan - r those for JUMBO loan?
Posted by Mike
Tue Sep 4th, 2007 04:27 PM
Just called my mortgage broker.
6 7/8 for a 30 year fixed jumbo, no points.
Manhattanmortgage website says 7.25 for 30yr fixed, 0 points on 1m loan., 6.5% for a 5/1
There is definately money out there.
Posted by Ronen
Tue Sep 4th, 2007 05:49 PM
Increased rates in Manhattan may be due to an increased risks for the banks in giving loans here so all the blha blah blah about the Manhattan fundamentals that are different then the rest of the country are disputed by the bank underwriters. I locked in a 30 Y fixed Jumbo loan with Chase on a single family house in Riverdale 20% down @ 6.625 % paid for 1 point. I got the commitment letter and the loan officer ensured me that this will be my rate at closing on 9.28.07. I decided to buy in Riverdale because prices there are more realistic then in Harlem. Is it possible that Riverdale is less risky for banks then Manhattan these days?
Posted by Noah
Tue Sep 4th, 2007 05:55 PM
hmmm, great question Ronen. I dont know that market.
Maybe the banks do know something we dont?
Posted by Susan
Wed Sep 5th, 2007 11:21 AM
Noah: Re: HSBC rates...
I'm currently negotiating a loan with them that is definitely a jumbo. The paperwork I got listed a rate of 7.875 on a $650,000 loan.
Susan
Posted by Mike
Wed Sep 5th, 2007 01:32 PM
Susan - go elsewhere. You can do much better. Just check out manhattanmortgage.com (i have no affiliation) or even use lendingtree.com (i have no afiliation). You should be no worse than 7% with no points.
Posted by Mbt
Thu Jun 3rd, 2010 01:31 AM
I think another reason fees are not being paid and free months not offered is that prices have come down. Apartments are moving but part of the reason is that prices came down to a point at which they will move.