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November 16th, 2011

Mortgage rates remain at historical lows as HARP 2.0 kicks off

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Fannie Mae and Freddie Mac released their details of the expanded HARP program to lenders yesterday (lenders can begin accepting applications Dec. 1). While the language in the GSE’s releases was rather technical, meant for lenders as opposed to borrowers, we deciphered the biggest changes and explained what they will mean to homeowners in a blog post titled, “Fannie, Freddie release HARP 2.0 details.”

“Details of the expanded refinance program are just coming out, but the enhancements seem very likely to bring both lenders and borrowers to the table,” said Keith Gumbinger, vice president of HSH.com. “Among the changes are lower costs for borrowers, easier income qualifications and greater liability protection for lenders,” Gumbinger added.

Low mortgage rates are also a key ingredient to making HARP 2.0 a success. And according to the latest weekly mortgage rate report from HSH.com, rates remained near record lows for the wraparound week ending Nov. 15.

Rates on the most popular types of mortgages were fairly flat from the previous week, according to HSH.com’s Weekly Mortgage Rate Radar. The average rate for conforming 30-year fixed-rate mortgages rose by a single basis point (0.01 percent) to 4.14 percent. In contrast, conforming 5/1 hybrid ARM rates fell by 4 basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at average of 2.98 percent.

Fed is helping to keep rates stable

The Fed is certainly one reason why mortgage rates have consistently remained near record lows–a trend of continued importance as HARP 2.0 will begin at the start of next month.

Economic ramifications from the external events–like those happening in Greece and Italy–are one of the reasons the Federal Reserve embarked on Operation Twist better than a month ago. Coupled with a new MBS money-recycling program, the effect so far seems to be keeping interest rates fairly stable amid what might have been wider swings.

11.14.11--OpTwistStart

In the face of gently improving economic data in the U.S., mortgage rates have settled back after a minor upward run, and continue to provide important supports to beleaguered homeowners and homebuyers alike.

Low mortgage rates expected to continue

Looking forward, there’s little reason to expect any big change in mortgage rates. There’s no reason to expect that any of the economic reports out this week will change the interest rate picture to any great degree. A wobble of a couple of basis points in either direction this week is equally likely, but no matter, since mortgage rates will hang around these levels and just above record lows, regardless.

In HSH.com’s latest two-month forecast for mortgage rates (published Oct. 7), we anticipated that 30-year conforming fixed-rate mortgages would wander between 3.90 percent and 4.25 percent. Mortgage rates have maintained that range, and given that the next two-month forecast is due out by mid-December, we should remain in that window through the end of the year.

Have a HARP 2.0 question? Leave me a comment below and I’ll do my best to answer your question.

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11 Responses to “Mortgage rates remain at historical lows as HARP 2.0 kicks off”

  1. Dave Says: November 16th, 2011 at 2:30 pm

    Will only the big 4 banks (Bank of America, Chase, Citigroup, and Wells Fargo) participate in the program? Can credit unions participate? If Fannie and Freddie are guaranteeing the loans, why wouldn’t they? Thanks!

  2. Bob Says: November 16th, 2011 at 3:49 pm

    Are you aware of a published list of HARP participating lenders? I currently have a Fannie mortgage that is serviced by a “SERVICER” who is not a lender and, therefore, cannot do a refi. It appears that lenders are only willing to do a HARP refi for their existing borrowers.

  3. Tim Manni Says: November 16th, 2011 at 6:03 pm

    Dave and Bob

    Thanks for commenting. Since both your questions are similar, I’ll answer them as one. HARP is a voluntary program so not every lender will participate.

    Bob: Your servicer isn’t the owner of your loan, they collect your payments for the lender, etc. You need to determine if your LENDER is participating in HARP.

    Here is a link that shows all Freddie HARP participating lenders: http://www.freddiemac.com/cgi-bin/homeowners/relief_refi.cgi

    Here is the link to search if your loan is guaranteed by Fannie: http://www.fanniemae.com/loanlookup/

    Here’s a link to see if your loan is guaranteed by Freddie:
    https://ww3.freddiemac.com/corporate/

  4. John Says: November 16th, 2011 at 8:01 pm

    Just because your own lender is participating in HARP does not mean you are out of luck. Most likely you can refi through a new lender altogether. Chances are you will get a better rate by going to a new lender than through your current one too if it is an institutional lender.

    Mortgage brokers, like myself, work with various lenders who participate in the HARP program, not just big banks.

  5. Dave Says: November 16th, 2011 at 8:49 pm

    Thanks Tim. Like Bob I have a Fannie-backed loan, and I would love to see a list of Fannie lenders that could potentially do my refi. Also, I have one other follow-up: if I have a second mortgage, would it be possible for a bank to refi both of my loans as one new loan, cutting out my second lender? I’m guessing not, but if Fannie is backing the mortgage no matter the LTV, it seems reasonable to ask.

    In other words, given a primary for 80% of the original loan, and a secondary at 20%, could I get one new loan for the entire 100%? Nowadays both of those loans would give me an LTV of 135%, but there are no more LTV restrictions…

    Thanks again!

  6. Laura Says: November 30th, 2011 at 4:22 pm

    My lender (CitiMortgage) says the I do qualify for new program but it will not lower my current APR of 5.73? Is that accurate?

  7. Scott Says: December 3rd, 2011 at 12:53 pm

    Hi Tim,
    Just talked to my lender (GMAC) and they will reduce my rate from its current 6.5% to 4.5%. They also said they have to charge me $2,219.00 in closing fees. They said this is required by Fanny Mae. And they also said because of my credit score(687) thats the lowest intrest rate Fanny will give me. Are they right?

  8. Marc Says: January 1st, 2012 at 11:08 am

    Everytime I call my bank, they say HARP 2.0 is not ready to go yet. I heard one of them say that March 2012 is the expected date.

  9. Tim Manni Says: January 4th, 2012 at 4:48 pm

    Hey Marc,

    Yeah I’ve heard that too. Lenders need time to update staff, computer software etc. Be patient and please keep us posted!

    Thanks for your comment,
    Tim

  10. Tim Manni Says: January 4th, 2012 at 4:49 pm

    Scott,

    Well, closing costs are certainly common with a refinance. You can shop around to find a lender with lower closing costs. Also, given your score, that seems like a great rate. But don’t be afraid to shop around.

    -Tim

  11. Kim Says: January 12th, 2012 at 6:46 pm

    Fortunately for me, it’s done. We closed 3 days ago. About 2K closing cost with GMAC/Ally -original lender. We are able to reduced our interest rate from 5.3% down to 3.375% and cut down our loan term from 30 to 15 years. I can’t complain. I am very happy. Jumped on it as soon as it was available. We didn’t even shop for a better rate. Original borrowers I believed are given priorities by the original lenders, so we didn’t waste any time. My husband was on top of it the first day it became available. It was a pretty smooth process. If there’s something good that came out of this recession, I’ve to say it is HARP 2.0. Salute to President Obama.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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