Conforming and FHA Mortgage Rates Rise and Fall —– By Jeff Moran

According to interest rate researchers HSH Associates, the 30-year mortgage rates for fixed home loans which were as low as 5.89% in April of this year and have been rising and have nearly reached a 1-year high of about 6.75%.  Conforming and FHA mortgage rates remain below 7%, but they have been rising and the consumer response is not positive.  According to mortgage broker, Chris Kostoff, “Borrowers are weary of the rising rates to the point where more people may decide to rent homes until interest rates become lower.”

The financial woes and corporate lay-offs at Freddie Mac and Fannie Mae, the U.S.’s two largest mortgage servicing companies, are certainly not helping keep home mortgage rates low. These two government created public trading companies continue to tighten their lending guidelines that make it increasing tough on mortgage lenders and brokers,no to mention homeowners ntrying to refinance into an affordable mortgage rate.  With Fannie and Freddie the cost of selling mortgage loans continues to increase and ultimately consumers will be affected.

FHA mortgage loans continue to perform well because of HUD’s visionary loan guidelines that consider more than just the credit scores. FHA Home Loans do not allow “stated income” mortgages either.  All FHA loans require full documentation in an effort to ensure that borrowers can afford their house payments before signing loan documents.  Fannie and Freddie seem to be following FHA as they are allowing significantly less “stated income” loans than previous years.