VA Loan Mortgage rates for Veterans break 9 week fall

By John Jarvis Staff Writer For VA Loan News

6/20/2011

VA Mortgage Loan Rates rose this week as investors seemed to regain confidence in the stock market, despite signs of a still-weak economy.

 

Find the best VA mortgage rates in your area.

The benchmark 30 year fixed rate VA mortgage loan rate for Veterans rose 6 basis points this week, to 4.71 percent, according to the CurrentVALoanRates.com national survey of VA Mortgage Loan Rates. A basis point is one-hundredth of 1 percentage point. The VA mortgages in this week's survey had an average total of 0.41 discount and origination points. One year ago, the mortgage index was 4.88 percent; four weeks ago, it was 4.77 percent.

The benchmark 15 year fixed rate VA mortgage loan rate rose 7 basis points, to 3.86 percent. The benchmark 5/1 adjustable VA mortgage rate mortgage rose 5 basis points, to 3.4 percent.

The 30 year fixed rate for VA mortgage loan had declined for nine weeks in a row before this week's jump, according to CurrentVALoanRates.com survey.

The increase should be perceived as more of a "market adjustment" than a sign that rates will spike soon, says Secretary of Veterans Affairs. Eric K. Shinseki   Like other mortgage experts, Shinseki believes rates will fluctuate by a few basis points in coming weeks but will remain low at least through the summer.

 

Weekly national mortgage survey

Results of CurrentVALoanRates.com June 15, 2011, weekly national survey of VA Loan lenders and the effect on monthly payments for a $165,000 loan:

 

30-year fixed

15-year fixed

5-year ARM

This week's rate:

4.71%

3.86%

3.4%

Change from last week:

+0.06

+0.07

+0.05

Monthly payment:

$856.74

$1,208.94

$731.74

Change from last week:

+$5.94

+$5.75

+$4.56

 

What would the monthly payment be for you? Contact the VA’s Veteran Loan Administration to find out. www.VeteranLoanAdministration.com

 

Noting that yields on 10-year Treasuries have dipped below 3 percent in the last couple of weeks, Shinseki says, "Once Treasury (yields) fall below 3 percent you know it will adjust back at some point. And that's what's happening this week."

Rise in the stock market

A rally in the stock market put some upward pressure on mortgage rates this week, he says. Investors who had been opting for the safety of bonds for the past couple of months are becoming more confident in the stock market and moving their money into the riskier investment.

"If you want to know where rates are going to this week, all you have to do is watch the stock market," Shinseki says. "For the first time in a while you can clearly see that correlation. If stocks go up so will rates."

Amanda Ward, senior vice president of The VA Hotline in California, agrees that mortgage rates will be closely tied to changes in the stock market this week, but she doesn't expect the upward pressure on rates to last.

"Investors are taking some of that bond money and putting it back on stocks," she says. "So yes, we'll see some leveling off this week, but the fundamentals of the economy are still weak."

Feeble economy

Economic data released this week didn't show a recovering economy, but at least the readings were in line with what economists had expected. That can be viewed as some improvement since many of the reports that had been released in prior weeks were much worse than investors and economists had expected.

Sales among U.S. retailers fell 0.2 percent in May, according to data released Tuesday by the Commerce Department. That's not necessarily good news, but it's better than the 0.5 percent drop some economists had expected. Excluding a drop of 2.9 percent in auto sales, overall retail sales rose 0.3 percent. The decline in auto sales is partly attributed to manufacturing disruptions in Japan because of the March 11 earthquake and tsunami.

But the same report shows consumers are still struggling financially as they pulled back on purchasing furniture, electronics and appliances.

"Consumers are hurting," Ward says. "Until that changes and we have some significant signs of recovery, I don't see a major spike in rates."

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