Welcome to Illinois Mortgage Rates and News week in review for the week ending September 5th, my take on the week's financial news and how it affected Illinois mortgage rates.

It's official. The biggest threat of inflation has passed and the weakening economy is our worst fear going forward (for this week anyways). Mortgage bonds are in full rally mode now, which means mortgage rates are moving down. Rates are at the best level in months, and this rally may have some more room to go. Over the last 3 months all the talk from the financial pundits (and many Fed Chairmen) has been about how inflation is set to ravage our economy. But now oil prices are down to $105 per barrel (from a high of $147 in July), and the economies in Europe and Asia are skidding to a halt. The dollar is showing signs of life and this all leads to money flowing out of stocks and into Treasury Bonds as a flight to quality, with mortgage backed securities going along for the ride.

The economic news this week showed more signs that the Fed won't be raising rates any time soon. The ISM index, a survey of national purchasing managers, came in at 49. Anything below 50 is a sign that the economy is down. The Fed Beige Book showed that most areas of the country are showing signs of economic weakness. Productivity was up slightly, but that just shows that producers are able to get more out put with less labor. The biggest report of the week was the unemployment report released this morning showing an increase in the unemployment rate from 5.7% to 6.1%, the highest it has been in the last five years. The report showed a loss of 84,000 jobs for the month (worse than the 70,000 loss that was expected) and the previous 2 months were also revised lower. Remember, with new population growth, it takes an increase of about 150,000 new jobs per month just to stay even. We now have less people employed than were at this time last year. Several Fed members also gave speeches, and the consensus was that we are going to be muddling through for a while, and inflation is, or will be under control.

A bigger story may be brewing this weekend. According to articles in the Wall Street Journal, Washington Post and New York Times (Hat trip to Calculated Risk), Fannie Mae and Freddie Mac are about to be put into a conservatorship under government control. This is the long talked about bailout of the two mortgage giants, and it would likely wipe out any equity stock investors still hold. It's not that this action is unexpected, both the Fed and the Treasury Secretary announced a month ago that they were ready to stand behind and guarantee any losses. But knowing a bomb is out there and hearing the explosion are different. If this takeover happens as they expect, it will be another interesting weekend, and it will have a big impact on the markets on Monday.

Mortgage bonds improved most of this week, but after the worse than expected employment numbers bonds actually ended the day worse than where they started. Still, it was a major rally for the week, and some profit taking by traders is expected. Technical indicators show that we may have some more room to run. One unknown is how low oil prices will go. Some analysts doubt that they will go below $100 per gallon. If they do OPEC could shut off the spigot and reduce supply to keep prices high. That may be harder to enforce than it has in the past, and with the economy slowing they may need to cut back a lot to keep the price propped up. What this all means is that if you are in the market to buy a new home, you may have better rates in your future, and if you've been thinking about refinancing but weren't able to get it done when the rates were lower, you may be about to get a second chance. Either way, if you need help, give me a call.

Here is what Illinois Home mortgage rates look like today for an A+, full doc purchase on a 30 day rate lock, with 0 points, and no origination fee. The conventional loans are based on the highest conforming loan amounts, which give the best pricing. (Again, there are many factors which affect mortgage rates and your ability to be approved for a loan. These rates may not fit your situation and this is just a sample of the programs that are out there. If you would like a quote for your personal situation, or to get pre-approved for a mortgage, give me a call or Contact me illinois mortgage company and I'll take the time to find the rate and program that is best for you.) :

Conventional loans up to $417,000

30 year fixed rate 6.125% 6.254% APR

15 year fixed rate 5.625% 5.789% APR

5-1 A.R.M. 5.46% 5.576% APR

7-1 A.R.M. 5.69% 5.735% APR

For Jumbo loans over $417,000

30 year fixed rate 6.75% 6.834% APR

7-1 A.R.M. 5.99% 6.103% APR

FHA LOANS - 3% down payment

With 1 point origination fee - 60 day lock

30 year fixed rate 5.875% 6.463% APR

With no origination fee - 60 day lock

30 year fixed rate 6.00% 6.472% APR

FHA APR reflects 3% down payment and the effect of mortgage insurance on the loan.

These are just a few of the mortgage programs and mortgage rates available. Which option is best for you depends on your own specific goals and needs. If you have any questions or want to go over your situation in depth, let me know how I can help.

Pete Thompson is an Illinois mortgage banker who provides superior mortgage service and competitive mortgage rates in Chicago, the Chicago area and throughout Illinois. Click here for a Free copy of The Real World Home Buyer's Guide - How to Save Thousands when Buying a Home and Getting a mortgage. For information on the latest mortgage news and current Illinois mortgage rates, please visit Illinois Mortgage Rates and News.