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Lending to get tougher? Plus rates…

We all think current lending standards are tough… Well the Government is now proposing even tougher mortgage lending guidelines for 2012.  As you may know 95% of loans originated are purchased by Government-Sponsored Entities (Fannie Mae and Freddie Mac) since there are not many “Private” money lenders like we had during the “bubble” years. We think these new rules maybe a way for the Government to wind down the GSEs and significantly reduce their risk. Unless Wall Street and other private lenders fill the void, we will be subjected to these tough rules next year. The mortgage community is preparing to fight these new proposals.

Here’s what’s being proposed, if we don’t meet these standards we are looking at 2%-3% higher rates. That calculates to 6%-7% in today’s market.

  • Borrowers who do not have at least 20% down will simply not have access to the lowest rates. Today you can still get low rates with 3.5% to 5% down
  • Strict mandatory debt to income ratios. Your total household debt cannot exceed 36% of income. Currently borrowers are allowed to go up to 45% on conventional and up to 50% on FHA loans
  • Want to refinance your home? You will need a minimum of 25% equity and 30% if you intend to pull cash out. The proposal does not even opine about investment properties!
  • Have any late payments? No approval – period.

Interest rates improved this week as Standard & Poor’s announced that US debt maybe downgraded to “Negative”…. Here are today’s rates.

Current Conforming RatesPrimary residences only (Pmyts based on a average loan amount of $250,000) for a historical perspective on rates please visit my blog
Loan Program Monthly Pmyt Rate APR Points
30YF $1285 4.625% 4.79% 0
20YF $1581 4.375% 4.62% 0
15YF $1818 3.75% 3.92% 0
5/1 ARM $1054 3.00% 3.25% 0
7/1 ARM $1122 3.50% 3.69% 0
10/1 ARM $1193 4.00% 4.25% 0
FHA-30YF $1248 4.375% 4.45% 0
FHA-15YF $1833 3.875% 3.98% 0

 

Current High Balance Rates – (Pmyts based on a average loan amount of $550,000)
30YF $2869 4.75% 4.92% 0
15YF $4033 3.875% 4.00% 0
5/1 ARM $2393 3.25% 3.40% 0
7/1 ARM $2508 3.625% 3.87% 0
FHA-30YF $2786 4.50% 4.62%

We appreciate the opportunity to work with you on your next refinance or home purchase transaction.  Please use the Social Media buttons below to pass this along if you think we can help any of your close friends or family.

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