The 30 year rate fell from 4.97 to 4.95 this week. This is the 2rd week in a row where rates have fallen. The expectation has been (for several months) that rates were going to rise. It looks like an economic recovery, which is somewhat more tepid than expected, has stopped rates from rising. Instead at least the 30 year rate has remained remarkably stable. For most of 2010 the 30 year rate has stayed between 4.9 and 5.1. The 15 year dropped from 4.33 to 4.32. The 5 and 1 year arms dropped from 4.11 to 4.05 (5 year arm) and 4.27 to 4.22 (1 year arm). While the 30 year has mostly hovered moving up and down the 5 and 1 year arms have both dropped over a 10th of a point over the last month. Below are rates from the weeks from Feb 11, 2010 to Mar 11, 2010
Mar 11, 2010
30-fixed 4.95 15-fixed 4.32 5 ARM 4.05 1 ARM 4.22
Mar 04, 2010
30-fixed 4.97 15-fixed 4.33 5 ARM 4.11 1 ARM 4.27
Feb 25, 2010
30-fixed 5.05 15-fixed 4.40 5 ARM 4.16 1 ARM 4.15
Feb 18, 2010
30-fixed 4.93 15-fixed 4.33 5 ARM 4.12 1 ARM 4.23
Feb 11, 2010
30-fixed 4.97 15-fixed 4.34 5 ARM 4.19 1 ARM 4.33
Sep 03, 2009
30-fixed 5.08 15-fixed 4.54 5 ARM 4.59 1 ARM 4.62
So rates are interesting but let’s look at actual mortgage payments. Taking our mortgage calculator we determined the rates for a 200k loan. We also did the same thing with rates from February, 25 2010 and rates from September, 03 2009 (6 months ago)
Mar 11
30-year $1067.53
15-year $1511.65
5-year ARM $960.6
1-year ARM $980.37
Feb 25
30-year $1079.76
15-year $1519.78
5-year ARM $973.37
1-year ARM $972.2
Sep 03
30-year $1083.44
15-year $1534.07
5-year ARM $1024.09
1-year ARM $1027.68
Again we can see the differences are pretty slight. Rates have fallen both of the past 2 weeks. But a 200k mortgage payment would only have been $12.23 more 2 weeks ago for a saving of 1.13 percent, nothing to write home about. Compared to 6 months ago a mortgage payment is $15.91 cheaper today (for a drop of 1.46 percent), again nothing overwhelming.
So what do we think is going to happen? At this point we know what is going to happen just not “when”. At some point the economy is going to improve and rates are going to increase. But whether that will happen in 1 month or 12 we will have to wait and see.
What is our advice to people looking for a mortgage? First just because you got approved for a certain type of loan two years ago doesn’t mean you can get that same loan today. Banks have gotten a lot stricter with loans. First instance home equity loans are much harder to obtain. So long story short the best idea is to approach a bank/mortgage broker early in the process. Second while we don’t know when mortgage rates will rise there is certainly a better chance they will rise soon than fall. There is very little chance rates are going to fall in the short term. So there is probably decent risk but little gain in waiting for rates to fall further. I see 4.6 as probably a bottom that we could see in the next year or so.
Ki’s site helps buyers search homes in the Austin MLS http://www.escapesomewhere.com/realestate_searchthemls.html along with providing information on Austin real estate http://www.escapesomewhere.com market and historical mortgage rates http://www.escapesomewhere.com/mortgageinterestrates.html
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