Example 30 year mortgage rates (from myfico.com – see site for current rate estimates). We have posted twice on this previously – August 2007 – May 2007. Since then rates have decreased on 30 year fixed mortgages but jumbo rates have increased significantly.
| FICO score | APR May 2007 | APR Feb 2008 – regular | APR Feb 2008 – jumbo | payment/mo May 2007 | payment/mo Feb 2008 – regular | payment/mo Feb 2008 – jumbo |
|---|---|---|---|---|---|---|
| 760-850 | 5.86% | 5.53% | 6.61% | $2,362 | $2,278 | $4,476 |
| 700-759 | 6.08% | 5.75% | 6.83% | $2,419 | $2,525 | $4,579 |
| 660-699 | 6.37% | 6.04% | 7.12% | $2,493 | $2,335 | $4,713 |
| 620-659 | 7.18% | 6.85% | 7.93% | $2,709 | $2,620 | $4,373 |
| 580-619 | 8.82% | 9.22% | 9.40% | $3,167 | $3,282 | $5,834 |
| 500-579 | 9.68% | 10.20% | 10.37% | $3,416 | $3,568 | $6,336 |
Amounts shown for borrowing $400,000 and rates as of Feb 18th (and May 2007). Jumbo payments are based on $700,000. Previously I could see the assumptions on the site which were (but I see no details on the calculated amounts as of Feb 2008): For scores above 620, the APRs above assume a mortgage with 1.0 points and 80% Loan-to-Value Ratio. For scores below 620, these APRs assume a mortgage with 0 points and 60 to 80% Loan-to-Value Ratio.
In the last 6 months the premium for jumbo loans has increased from a very small premium to over 100 basis points for high credit scores. For lower credit score the premium has not increases (based on the numbers from myfico – which as I stated does not provide the assumptions (it might be that a 40% down payment for lower credit scores is required and that decreases the risk to the lender).
In August I wrote that “I was expecting the rates to show the widely reported expanding of the risk premium (charging increasingly higher rates for riskier borrowers). For example, in May the difference was 382 basis points (9.68% for the lowest FICO range and 5.86% for the highest. However the current difference is just 404 basis points – hardly a big increase. The reason must be that the MyFICO page shows rates for homes with 20% down at the high end of scores and 20-40% down below there.” The risk premium is now 10.37 – 6.61 = 376 basis points.
Related: 30 Year Fixed Rate Mortgage Rate Data – Learning About Mortgages – Homes Entering Foreclosure at Record Pace – Real Free Credit Report (in USA)
Rates on big mortgages are unusually high
The positive news – at least for those seeking a smaller jumbo mortgage – is that Congress feels your pain. As part of the economic stimulus bill signed by President Bush last week, the limit for Fannie and Freddie mortgages will be temporarily raised from $417,000 to $729,750.
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This year, the average discount rate has fallen every month while the average 30 year mortgage rate has climbed all but 1 month (a 5 basis point drop)…
Since February the premium for jumbo loans has decreased to 88 basis points (from 108) for all credit scores above 620…