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Mortgage rates begin recovery from post-cliff spike

Mortgage rates have begun to recover and drop after the Federal Reserve induced spike in price to begin 2013. As you may remember, Federal Open Market Committee (FOMC) discussed curtailing its stimulus measures in a recent meeting, which sent investors scrambling to leave the bond market. We expected the jump in price to slow, and eventually for mortgage rates to fall back down – and so far rates have done exactly this.

Today, seven of the 10 loan programs we tracked had their mortgage rates drop. Just one program – 30-year FHA 203k – had its mortgage rate jump. For more on how we expect rates to move in early 2013, see HERE.

Before we continue further, we would like to touch briefly on the methodology for this CCL Rate Tracker. We will be changing our format slightly, so that published rates reflect the option closest to one point in total cost.  We refer to “total cost” as the combination of the CCL origination charge combined with the lender’s cost for its rate. To understand more about rate pricing, see our guide HERE.

In practice, this means that we are now publishing the 3.125 percent rate (3.169 percent APR) for the 30-year fixed (rather than 3.000 percent). The only other rate this affects is the Manufactured FHA 30-year fixed, which is 4.250 percent (5.263 percent APR), up from 4.125 percent. The 15-year fixed rate remains the same at 2.375 percent (2.507 percent APR). For the complete January 14, 2013 mortgage rate update, go HERE and scroll down to the Rate Update portion of the post.

If you would like to receive a more detailed Mortgage Rate report, you can subscribe to our “CCL Rate Tracker.” The CCL Rate Tracker follows 10 loan programs and publishes three rate options closest to 1 point, par, and 1 rebate for each program every two weeks and delivers the results in an email. To sign up, please email with the text “Rate Tracker.”

This is a busy week for economic numbers and housing metrics to be released. Stay tuned for the following

  • Producer Price Index (January 15)
  • Retail Sales (January 15)
  • Consumer Price Index (January 16)
  • Industrial Production (January 16)
  • Housing Market Index – NAHB (January 16)
  • Housing Starts (January 17)
  • Jobless Claims (January 17)
  • Consumer Sentiment (January 18)
Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile