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According to Fannie Mae’s most recent monthly survey, the upward trend in housing market sentiment has continued. Respondents in its January survey believe home prices will rise by 1 percent over the next year, an improvement over the 0.8 percent gain predicted in December. Additionally, 44 percent of those responding to Fannie Mae’s survey expect their personal financial situation to improve over the next year, up from 40 percent who felt that way the month prior.

Other recent reports support an improving housing industry and economic outlook:

• The National Association of Realtors said total existing-home sales rose 5.9 percent in the fourth quarter of 2011, and were 9.2 percent above the fourth quarter of 2010. 

• Homebuilder optimism was up in February for the fifth straight month, according to the NAHB/Wells Fargo Housing Market Index.

• The Mortgage Bankers Association said that mortgage delinquencies dropped to the lowest level in three years during the fourth quarter.

• New applications for unemployment benefits dropped to the lowest level since March 2008, a sign that the labor market is on the mend.

•  Earlier this month, Weichert set a new record for the number of customer inquiries received via its Weichert.com website in one day.

  The Latest Mortgage News
Photo: © Catherine Yeulet - iStockphoto

The average rate for a conventional 30-year fixed rate mortgage (FRM) reached a record low, according to Freddie Mac's Primary Mortgage Market Survey. For the first time in history, the 30-year FRM dropped below four percent, averaging 3.94 percent for the week ending October 6, 2011. That's a 0.33 percent difference from last year's average of 4.27 for the same week in October. The 15-year fixed-rate mortgage—one of the most popular options for refinancing—fell to 3.26 percent, the lowest level on record.  

Higher Interest Rates for Jumbo Loans
Homeowners looking to buy or refinance in the country's most expensive real estate markets will need every break on mortgage rates they can find. Fannie Mae and Freddie Mac recently dropped the jumbo loan mortgage limit from $729,750 to $625,500. This change will lead to slightly higher interest rates for jumbo loans; fortunately, historically low interest rates for 30-year FRMs will help offset the increase.

Changes to the Federal Housing Administration program might also have an effect on some of these buyers. The same ceiling drop to $625,500 also applies to FHA-insured mortgages in many counties. Jumbo-loan borrowers who previously qualified for special lower down payments with the FHA program may no longer qualify, a situation that could price some buyers out of the market. A year ago, a jumbo-loan borrower could buy a home in a high-cost market with as little as 3.5 percent down; today, they might need a down payment as high as 20 to 30 percent, and they'll need an excellent credit rating.

Reap the Benefits of Low Mortgage Rates
What can home buyers take away from this latest news from Fannie Mae, Freddie Mac, and the Federal Housing Administration? Anyone looking to buy or refinance a home in the next few years can rest assured that they are receiving one of the best mortgage rates on record. Buyers need to prepare for their first home purchase by saving for a down payment and repairing their credit score, since the best interest rates require an excellent credit score.

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