In a survey of mortgage interest rates around the country, Best Syndication found that rates are on the rise (see the link to the survey below). Since November of last year rates have been steadily increasing despite lower interest rates offered by the Federal Reserve.
Rates in Los Angeles, Buffalo New York, Miami Florida, Seattle Washington, Chicago Illinois and Dallas Texas were surveyed and compared. Best Syndication only included local lenders and did not incorporate national banks and mortgage companies in the survey. This gives the review of rates a local representation.
Only conforming new purchase loans from $300,000 to $417,000 were considered. Interest rates in July of 2008 were 6.520 on average while rates in August were 6.178 on average. Refinance loan rate may vary.
In the past we saw some local lenders with lower rates, but in August we did not see that. Most of the larger national lenders had lower rates than the local banks. Of course the interest rate will depend on the credit history of the borrower.
Down payments are more important than ever. Housing prices have been declining over the past year and lenders want the borrower to have a bigger stake in the house.
Conforming loans are easier to qualify for because they are easier to sell in the secondary market. Typically (in many areas around the country) lenders can sell non-jumbo loans under $417,000 to Fannie Mae or Freddy Mac. There is usually a substantial down payment for non-conforming loans. Lenders will also ask for income verification.
With the low prices you might think this is a buyers market. There are two factors working against that. First off, home prices are still falling. Few people want to take a chance and have their home values fall. Second, money is tight and lenders don’t have the funds they used to have to make loans.
