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Loan-level price adjustments and how they affect home-buyers; St Louis Mortgage Interest Rate Update

“Ballparking” mortgage rates just is not the same anymore. Home buyers who obtain online quotes from popular websites are receiving nothing more than a starting point for what their final mortgage rate will be.  This is due to a government-led pricing scheme called loan-level pricing adjustments or LLPAs.

The government has taken the example of risk-based pricing from the auto insurance industry.  “Riskier” car owners pay higher rates for insurance, e.g. a driver with a few accidents and speeding tickets in their past will pay a higher premium than the driver with a clean driving record.

In the mortgage world, LLPAs are made against a multitude of loan traits. For example:

  • Smaller down payment borrowers will pay more than ones with larger down payments
  • A lower FICO score borrower pays more than one with a higher FICO score
  • Mortgages for investment property will cost more than mortgages for primary residences
  • Multi-unit home borrowers will pay more than borrowers with a one-unit home

In addition, owners of condominiums may pay more for mortgages than owners of single-family homes, as well as home owners with subordinate financing.

St. Louis MORTGAGE INTEREST RATES for May 19, 2011:

  • Conventional 30-Year Fixed 4.750%/ 5.125% APR
  • Conventional 15-Year Fixed 4.125%/ 4.5% APR
  • Conventional 5/1 ARM 3.500%/ 3.277% APR
  • FHA/VA 30 Year Fixed 4.500%/ 5.125% APR
  • Jumbo 5/1 ARM 3.375%/ 3.252% APR
  • Jumbo 15 yr Fixed 4.00%/ 4.29% APR
  • Jumbo 30 yr Fixed 5.250%/ 5.625% APR

*The above mortgage rates are based upon an 80% LTV, o/o single family with FICO scores of 720.

Paramount Mortgage is a locally owned Mortgage Banker; we just celebrated our 40th anniversary. Great rates and programs are secondary to what is most desired in a lender relationship. The most sought-after aspects in this industry cannot be easily translated onto paper…learn more about us here.

For more information or if you have questions on mortgage rates you may contact me by phone at my direct line, (314) 372-4319, email at rfishel@paramountmortgage.com or you can visit our company website at http://www.paramountmortgage.com.

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1 comment to Loan-level price adjustments and how they affect home-buyers; St Louis Mortgage Interest Rate Update

  • Harder for mortgage people, but perhaps better for the economy? People need to understand how much of a ballpark those online sites are these days. Or maybe out of the park. Thanks for posting.