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Mortgage Rate Update
Homebuyer Opportunities Nearing End
For prospective homebuyers who are on the fence about making a home purchase, the next few months represent a countdown of sorts for two reasons.
First, huge tax incentives are about to expire. April 30, 2010 is the last day to enter into a home purchase contract and still potentially qualify for a federal income tax credit of up to $8,000 for first-time homebuyers and up to $6,500 for repeat homebuyers. The credit can be claimed only on contracts that close by June 30, 2010.
Secondly, another form of stimulus will soon disappear, as the Federal Reserve winds down a program that has been keeping home loan rates artificially low. The fact is that the lowest rates of 2009 were driven down to their attractive levels because of the Fed's Mortgage Backed Securities (MBS) purchase program. The Fed has already used over 80% of the allocated funds for MBS, meaning less than 20% remains to be used over four months.
As the Fed's program winds down and ends, we'll likely see two things happen. First, we will probably see higher levels of volatility-with rates sometimes shifting dramatically in the middle of the day. Second, since MBS will have less support from the Fed, rates are likely to rise over time.
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Mortgage Interest Rates for Fixed Rate Mortgages*
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Rates as of Thursday, 17th December, 2009:
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Term
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Conforming
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APR
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Payment per
$1,000
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Jumbo
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APR
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Payment per
$1,000
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30-Yr. fixed
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360
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4.875%
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5.092%
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$5.29
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5.250%
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5.383%
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$5.52
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15-Yr. fixed
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180
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4.375%
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4.745%
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$7.59
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4.625%
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4.975%
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$7.71
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7-Yr. fixed ARM
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360
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4.875%
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5.092%
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$5.29
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5.500%
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5.635%
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$5.68
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5-Yr. fixed ARM
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360
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4.000%
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4.206%
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$4.77
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5.375%
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5.509%
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$5.60
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3-Yr. fixed ARM
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360
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4.875%
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5.092%
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$5.29
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5.375%
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5.509%
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$5.60
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FHA 30-year fixed
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360
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4.750%
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4.965%
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$5.22
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5.000%
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5.131%
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$5.37
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*Rates are subject to change due to market fluctuations and borrower's eligibility.
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New Jersey: Licensed by the N. J. Department of Banking and Insurance Delaware: Licensed Lender by the Delaware Office of the State Bank Commissioner.
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© Copyright 2009. All About News, Inc.
Karl - good update and i agree with you, volatile and more lending restrictions. It has been a crazy ride! over 140 banks close, and daily restricting...
Hi, Karl! Yes, bleak, but true. I have spoken with new loan applicants about the same thing. Rates are really good right now, but will not stay forever. Thanks for the update and the outlook, Karl.
Christine - Daily restricing is another great point. Just because someone qualifies today does not mean they will qualify tomorrow. We can expect to see more restrictions regarding credit score requirements and maximum debt-to-income ratios.
Rachel - There are so many reasons now is the time to act and we need to continue to educate consumers. Keep up the good work.