Current Mortgage Rates & Closing Costs

Just a quick post reviewing the data from the Mortgage Bankers Association.

There has been a lot of talk in the media about the rapid rise in closing costs lately.  We covered it under Closing Costs Higher a few months back.

In the most recent Weekly Mortgage Applications Survey from the MBA, there are a few interesting items occurring.  The report itself is pretty good.  They do a good job covering volume, the ARM v. Fixed shares of mortgages, and the current mortgage rates being issued by their surveyed lenders.

Volume:  Forget the weekly tracker.  Use their four-week moving average that smooths out holiday weeks, etc.  That index is up 4.4%, but bigger, the Purchase Index is up 1.3%.  Today we just posted the Pending Home Sales results…from July!!! Pending Home Sales does a great job forecasting the New Home Sales and Existing Home Sales reports on about a 60 day lag.  The mortgage Purchase Index would seem to indicate that August’s Pending Home Sales report should nudge up slightly.

ARM v. Fixed:  This is an interesting split.   The share of adjustable rate mortgages remains at only 6.1% in spite of an almost 0.80% spread between the 30 Year and the 5/1 ARM.   We simultaneously have the lowest 30 Year Fixed rates of all-time, but we also have a historically wide gap between the 30 Year and the 5/1 ARM.   With the 30 Year so low, it’s difficult to justify an ARM even though the lenders are all but giving these mortgages away.

Closing Costs:  This is the most interesting part to me.  The average contract interest rate for the 30 Year dropped from 4.50% to 4.43%.  BUT, the points dropped from 1.34 to .96 (.38%, or almost $950 on a $250,000 loan).  All rates and fees measured by the survey are for 80% loans and therefore avoid Loan Level Price Adjustments

These fees still strike me as shockingly high, but the good news is that we’re starting to see the mortgage industry throttle back on these fees.