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REPORT ON ROCKFORD AREA MORTGAGE RATES |
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May 12, 2008 -- To give you a general idea of what it will cost to get a home loan this week, conventional mortgage rates in the Rockford area are mostly in the range of 5.875% to 6.125% (from 5.875 to 6.25% last week). With the latest cut in the Fed Funds Rate the accompanying policy statement hinted that the present rate-cutting cycle may be nearing an end. As a result, Bonds and home loan rates reacted favorably. Economic weakness, slowing consumer spending, weak employment conditions, and dropping consumer confidence remain key concerns. So what is the outlook for mortgage rates? Economic indicators last week showed an economy that is neither growing nor shrinking and resulted in the prospect of lower inflation, which bodes well for mortgages rates stepping down slightly. But, if there is a spike in the Consumer Price Index and better than expected Retail and Industrial news it could mean an upward movement and possibly the Fed increasing rates. The Fed and other countries' central banks have worked aggressively to restore confidence in financial markets by shoring up the credit markets and stimulating economic growth, leading, we hope, to a quicker-than-expected credit and housing market recovery. The affect of economic stimulus checks should be felt in the coming months. If all these efforts re-ignite strong economic growth which leads to higher inflation we could see mortgage rates climb quickly...on the other, if growth continues to falter, there is a chance the Fed could continue the downward cuts. Home prices are predicted to decline 4.5% NATIONWIDE this year and 2.6% in 2009. Rockford has not been hit as hard as some other parts of the country, but sales are still down compared to recent record-breaking years. For buyers who can qualify for a mortgage, there is exceptionally good value out there. It's still good to keep in mind that current mortgage rates, overall, are well below the 1990s average of around 8% for a 30-year fixed-rate mortgage and 6% for the one-year ARM. Oil has surged, gold has skyrocketed, the dollar has fallen to the Euro, and many commodity prices have hit record highs. The bottom line is market volatility and uncertainty. Each Fed rate cut may may help with consumer short term rates on credit cards and adjustable-rate mortgages, but also may spur spending and therefore inflation which is the worst enemy of bonds and home loan rates. Keep in mind that already low 30 year fixed rates are tied to LONG-TERM bond yields that move based on the outlook for the economy and inflation and therefore may not be affected much by Fed rate reductions which affect SHORT-TERM (Prime) interest rates and Adjustable Rate Mortgages. WATCHING THE FORECASTS? According to a Mortgage Bankers Association forecast at the beginning of 2007, rates were expected to rise to about 6.7% by year end and to about 6.8% by the end of 2008. Note: while forecasts and predictions may serve as an "educated guess" guide, they are only good the day they are made and turnarounds and changes should be expected. Will we see lower prices stimulating demand, and that stimulating a recovery in 2008? It might be too early to make an educated prediction, but Fed officials generally expect a recovery starting in the second half of the year. Before the Fed began to push rates up in June of 2005, the funds rate was at a 46-year low of 1 percent. The 1990s average was around 8 percent for a 30-year-fixed-rate mortgage. The Fed Fund rate is currently 2% with the Prime Rate at 5%. Changes in the rate especially affect adjustable rate mortgages, home equity loans, and credit card interest rates. Higher inflation is generally bad for bonds in that the value of the bond is diminished, typically resulting in a decrease in bond prices. Lower bond prices mean higher mortgage rates. Remember, weaker than expected economic data is generally good for mortgage rates, while positive data causes rates to rise. Rule-of-thumb: rates move up quickly and down slowly. When the US stock market remains relatively stable, the demand for mortgage-backed securities tends to remain stable, resulting in little change in mortgage interest rates. However, as the stock market gains strength, investors seeking higher returns tend to move their money out of the bond market and into the higher yielding stock market. This reduction in the demand for mortgage-backed securities leads to a short-term decrease in bond prices and an increase in interest rates. (When bond prices fall, bond yields and mortgage rates both climb.) Remember, as a general rule, weaker than expected economic data is good for bringing mortgage rates down, while positive or strong economic news causes mortgage rates to rise. Additionally, short-term weakness in the stock market can bring about favorable short-term decreases in mortgage interest rates. Weakness of the U.S. dollar can result in foreign investors selling off bonds, creating turmoil for bond prices and interest rates. Stocks, too, are likely to suffer from a weakening dollar. Imported oil and other commodities also cost more when the US dollar is weak. By historical standards we're still seeing very attractive financing (even low) in the housing market. The average of the past decade was 7.3 percent, and we have to go all the way back to the 1960s to see rates comparable to what we had been experiencing in 2005 and 2006. When rates are low borrowers may be able to afford bigger and better homes -- or simply be able to get the home they wanted at a lower monthly payment than may have been expected. Either way, it still means savings each month and big savings over the life of a mortgage. The situation with subprime lending has become a major factor in the markets. Subprime accounts for perhaps 15% of the mortgage market. More than 80 subprime lenders have closed their doors since December and others drastically reduced their lending operations. With so many subprime lenders in trouble or closing their doors, the Federal Reserve has added over $40 billion to credit markets and made it cheaper for banks to access funds through a reduction in the discount rate. FHA and Freddie Mac have stepped in and are now introducing new programs that make it easier for subprime borrowers facing foreclosure to refinance and some investment is returning to higher-quality jumbo financing as well. Lenders are owning up to their mistakes and unqualified borrowers are no longer getting loans. There is a new incentive to start fresh. It was done before (in 1991) and once done will make for a more stable, profitable housing and lending market. A report by MarketWatch shows non-owner occupied investment homes as a big chunk of defaults primarily in four states which saw the fastest price appreciation over the last 5 years. Non-owner occupied properties in Nevada accounted for 32% of prime mortgage defaults and 24% of subprime loan defaults. In Florida, defaults for non-owner occupied properties made up 25% of prime loans and 14% of subprime. Arizona accounted for 26% and 18% respectively and California 21% and 15%. In the rest of the country, non-owner occupied homes accounted for about 13% of prime defaults and 11% of subprime defaults. The news has covered the doom and gloom of credit issues, but don't let the bleak and scary headlines get to you. All markets, whether credit, real estate, stock, or bonds, while being cyclical in nature, are historically self-correcting. For the last 6 to 7 years real estate was booming and breaking sales records. The correction we have now is only natural and a result of the overzealous investors and extremely loose guidelines for lending that developed during the boom cycle. Housing prices also have a history of cycles. Since 1979 residential real estate prices have had two 10-year cycles where prices rose significantly, then retreated by about 15% to 20% over the next year or two. Similar booms and busts can be traced back to the early 1900s. While many types of mortgage programs and rates are available to you, these comparison rates are based on a 30 Year Fixed Conventional loan with 5% down and 0 points. Rate and/or fee adjustments may apply. (To find your monthly payment see the mortgage calculator link at the bottom of the list of lender names and phone numbers). Mortgage rates are subject to change daily (and even several times a day), so call the bank or mortgage lender of your choice for the latest information. (I've included a list of many of our local lenders and phone numbers below. Please note that this list, and the figures used for rate comparison, does not include all lenders which provide financing and is not a guarantee of rates or options available). Some lenders will have different rates based on points. Simply put, with points you pay a percentage up-front in order to get a lower interest rate on the mortgage. Terms differ among lenders, so remember to check factors such as closing costs and application or origination fees, and how long the quoted rate will apply.
The most important thing you can do when starting to look for a home is to GET PRE-APPROVED by the lender of your choice. This will help you to focus on homes in your price range, and, when you find the right home, being pre-approved may mean the difference between getting the home, or missing out because someone else was ready and you were not. If you are a 1st time home buyer be sure to ask about special financing programs available to you. Questions? See my page on mortgage and financing information or Call the lender of your choice. If you are planning on purchasing a home in the Rockford area, then I recommend you work with a local Rockford area lender for their knowledge of the market and personal service. If you
are buying or selling a home, please don't hesitate to call
me at
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Mortgage Lender and Phone Number Alpine Bank 815-398-6568 Allied Mortgage Capital Corp 815-399-2210 Amcore Mortgage 815-961-7200 Associated Bank 815-987-3500 Belvidere National Bank & Trust 815-544-2400 Blackhawk State Bank 815-636-4371 Byron Bank 815-234-2561 Chase-Manhattan Mortgage 815-395-0900 Countrywide Funding Corp. 815-636-3540 First Bank Belvidere 815-544-0777 First Federal Savings Rockford 815-987-2850 First Home Mortgage 815-398-8800 First National Bank Beloit 815-623-8734 First National Bank Winnebago 815-335-2366 First Northern Credit Union 815-332-9898 GSF Mortgage 815-226-9620 Holcomb State Bank 815-874-6156 LaSalle Bank 815-398-2000 Macktown State Bank 815-624-8111
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Maple Park Mortgage 815-637-6300 Members Alliance Credit Union 815-226-2260 National City 815-395-3610 Northwest Mortgage 815-229-9456 Riverside Community Bank 815-397-5000 Rock River Bank 815-397-3111 Rockford Bank and Trust 815-963-2165 Stillman BancCorp 815-332-8100 Union Savings Bank 815-397-6880 U.S. Bank 815-639-2416 Vision Mortgage 815-654-7150 See the easy-to-use quick loan payment calculator below Understanding Mortgage Rates and Fees Understanding Mortgage Information and Terms INVESTORS – Tax Free Real Estate Investment Strategies More Financing and Mortgage Tips
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© Copyright 2000, 2001, 2002, 2003,
2004, 2005, 2006, 2007, 2008 Bill Marek, Personal Realtor®,
Rockford, IL For quick, up-to-date Rockford area real estate information, all in one place, all at your fingertips, BOOKMARK or SAVE THIS PAGE TO YOUR FAVORITES and visit often for timely information on houses for sale anywhere in the Rockford and Northwest Illinois area, visual grand tours, latest listing information, new construction home floor plans, custom built house plans and designs, plus home selling and home buying help, tips on how-to-buy and how-to-sell a home in Rockford Illinois, mortgage and financing information, Rockford area mortgage rates and mortgage payment calculator, lenders, banks, relocation and moving information, Rockford area schools and community information, information for Seniors and for first time home buyers, real estate investment, online house plans, tips on home improvement and home decorating, lots-acreage-land-new home building sites-new home subdivisions, free home evaluation, and free real estate reports from your Personal Realtor® in the Rockford Rock River Valley area of Winnebago, Boone, and Ogle counties. Homes and real estate listings on the Rockford Area Association of Realtors® multiple listing service are updated throughout the day for the latest and most accurate information on the availability of homes, condominiums, duplexes, rural or country property, river, water front, and water view property, commercial property and buildings, and land in the Rockford Illinois Rock River Valley area of Winnebago, Boone and Ogle counties including: Rockford zip codes 61101, 61102, 61103, 61104, 61105, 61106, 61107, 61108, 61109, 61110, 61112, 61114, 61125, 61126; Belvidere 61008; Cherry Valley 61016; Stillman Valley 61084; Byron 61010; Oregon 61061; Loves Park 61111, 61130, 61131, 61132; Machesney Park 61115; Caledonia 61011; Roscoe 61073; Rockton 61072; Poplar Grove 61065; Davis Junction 61020; Garden Prairie 61038; Winnebago 61088, Pecatonica 61063; Capron 61012 and surrounding communities in north and northwest Illinois. We hope you have found aboutRockfordHomes
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