Mortgage interest rates near 18-year lows - 15 Year Fixed Rates at 4.32%!

by Broderick Perkins
DeadlineNews.Com
Jeff Howard, ERATE

(11/19/09) Like a limber limbo dancer dropping ever lower, mortgage interest rates on the 30-year fixed rate mortgage (FRM) dipped to 4.83 percent the week ending November 19.

Last week, the 30-year FRM rate was 4.91 percent, compared to 6.04 percent a year ago, according to Freddie Mac's weekly Primary Mortgage Market Survey.

How low can they go?

The 15-year FRM's average is as low as it's been in 18 years, averaging 4.32 percent this week and down from an average 4.40 percent last week. The average 15-year rate was 5.73 percent a year ago, said Freddie Mac.

"Interest rates on 30-year fixed rate mortgage loans fell for the third consecutive week to the lowest since the week ending May 21st, while 15-year fixed rates were the lowest since our records began in 1991," said Frank Nothaft, Freddie Mac vice president and chief economist.

Lower rates are music to the ears of refinancing homeowners who are switching to less risky fixed rates.

Low home prices, combined with lower rates, are sending more renters to rent-vs-buy calculators.

"For the fourth consecutive quarter, more than 95 percent of prime borrowers who originally had an ARM selected a conventional fixed rate mortgage in the third quarter of this year," Nothaft said.

The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) interest rate averaged 4.25 percent this week, down from 4.35 percent last week and 5.87 percent a year ago.

The one-year Treasury-indexed ARM came in at an average 4.35 percent, down from 4.47 percent last week and 5.29 percent a year ago.

Mortgage interest rates continue to dip

by Broderick Perkins
DeadlineNews.Com

(11/17/09) Mortgage interest rates dipped as low as 4.32 percent, on conforming 30-year loans today. The average was 5.08 percent for fixed-rate mortgages (FRMS), while the high was 6.96 percent for the same loans.

The average was well off the 6.15 percent average a year ago, according to the weekly Interest Rate Review by Calabasas, CA-based Informa Research Services a market research, analysis, and intelligence gathering service for the financial industry.

Informa's National APR (annual percentage rates) numbers are tallied from a survey of 200 mortgage originators.

The average fixed rate has fallen for three consecutive weeks, on news of continued high unemployment and general economic malaise.

The average 15-year FRM was 4.51 percent compared to 5.92 percent a year ago.

The average rate for the 5/1adjustable rate mortgage (ARM), was 3.55 percent, down from 4.91 percent a year ago, Informa reported.

The FRM rates for 15- and 30-year mortgages and the 5/1 ARM rates are all based on a $200,000 purchase loan, with an 80 percent loan-to-value ratio, for an owner-occupied, single-family residence.

Informa also reports an average 6.07 percent fixed rate for 30-year, non-conforming jumbo loans, way down from 7.63 percent a year ago. The jumbo averages are based on a $450,000 purchase loan with an 80 percent loan-to-value ratio for an owner-occupied, single-family residence.

For a home equity lines of credit (HELOC) of $50,000 with an 80 percent loan to value note, the variable rate came in at an average 4.97 percent, up slightly from 4.8 percent a year ago.

Fixed rates on 15-year home equity loans of $50,000, with an 80 percent loan-to-value note, averaged 7.64 percent, compared to 8.01 percent a year ago, according to Informa's survey.

Mortgage Rates - 30 Year Fixed Mortgage Rates & 15 Year

30-year mortgage interest rates down 1.25 percentage points from a year ago

by Broderick Perkins
DeadlineNews.Com

If you purchased a home a year ago and have the equity and creditworthiness to swing it, a refinance today could save you hundreds of dollars a month.

Or, if you are in the market to buy a home, interest rates will make for a more affordable deal.

Freddie Mac's Primary Mortgage Market Survey today put the average fixed interest rate for 30-year conforming mortgages at 4.91 percent.

Last year at this time, the 30-year fixed rate mortgage (FRM) averaged 6.14 percent.

"Keeping rates at historically low levels for a sustained period of time has to remain a cornerstone of Fed policy until the economy gets back on track," said Nancy Osborne, chief operating officer of Erate.com.

On a $300,000 mortgage the principle and interest payment at today's average rate would be about $1,594, compared to $1,825 a year ago, according to Erate's calculators.

That's a monthly savings of $231. Put another way, a year's worth of the savings -- $2,772 -- amounts to almost two mortgage payments on a $300,000 mortgage at today's average rate.

Both home buyers and owners who want to refinance may have some time yet to shop around and dicker for the best interest rate deal.

"I don't suspect rates will begin to rise until we see at least three consecutive months of solid employment growth," Osborne said.

Freddie Mac also said the 15-year FRM averaged 4.36 percent, down from 5.81 percent a year ago.

Adjustable rate mortgages (ARMs)

The five-year Treasury-indexed hybrid adjustable rate mortgage (ARM) averaged 4.29 percent this week, down from 5.98 percent a year ago. The one-year Treasury-indexed ARM averaged 4.46 percent, down from 5.33 percent in 2009 at this time.

30 year fixed rates averaged 4.98%

Per Freddie Mac mortgage rates were down across the board this week. The 30 year fixed rate averaged 4.98%, down 5 basis points from last week, with an average cost of 0.7 points and the 15 year fixed rate averaged 4.40%, down 6 basis points from last week at a cost of 0.6 points. Fixed rates continue to average less than 5.00% for the year to date, reflecting the lowest average on record.

Adjustable rate mortgages averaged 4.47% for the week on one-year treasury ARMs, down 10 basis points from the previous week, with an average cost of 0.5 points and for the five-year treasury, adjustable rates averaged 4.35% for the week, down 7 basis points from last week with a cost of 0.6 points.

Source: Freddie Mac’s (FHLMC) Weekly Primary Mortgage Rates Survey (PMMS®)

30 year conforming fixed mortgage rates

Fixed rate mortgages fell slightly this past week yet remained relatively flat over all. The 30 year conforming fixed rate averaged 5.18%, down 4/10ths of a percent from the prior week, while the 30 year jumbo fixed rate fell 5/10ths of a percent to an average rate of 6.02%. The 15 year conforming fixed rate averaged 4.60%, having fallen 3/10ths of a percent from the previous week. Note that the maximum conforming loan limit remains at $729,750 for certain designated high cost areas but is generally capped at $417,000. Rates on Home Equity Lines of Credit (HELOCs) rose slightly by 2/10ths of a percent to an average rate of 5.08%.

Certificates of Deposits (CD) remained unchanged from last week averaging 0.46% for a 6 month CD and 0.75% for a 12 month CD. Rates on Money Market accounts fell slightly by 1/10th of a percent to an average rate of 0.45%. Credit card rates were unchanged for platinum cardholders, averaging 6.61% as well as holding steady for basic reward cardholders averaging 7.79%. Rates on 4-year new auto loans also were unchanged, averaging 6.89%.

Source: Informa Research Services, Inc. Interest Rate Review®

 

Just One Click = Current Mortgage Rate Charts

 

Interest Rate Review shows 30 Year Fixed Rates slightly higher

10/27/09 - Today Informa Research released their Weekly Interest Rate Review to ERATE. The Mortgage Lending Product Review shows a slight increase on Conforming 30 year fixed rate mortgages to 5.26% up from Oct 20th report of 5.22%. The Conforming 15 year fixed mortgage rate also increase to 4.68% up from last weeks 4.65%.

Disclosure: Mortgage Products - Fixed Rate Conforming (30- and 15-year): APRs are based on a $200,000 loan, owner-occupied, single-family residence, and an 80% loan-to-value ratio, on a purchase transaction.

National Average Long-Term Current Mortgage Rate Rises to 5 Percent

The 15-year FRM this week averaged 4.43 percent with an average 0.6 point, up from last week when it averaged 4.37 percent. A year ago at this time, the 15-year FRM averaged 5.72 percent.

Home Loan Applications on the Upswing Again

Sept. 23, 2009 - It is anticipated that fixed interest rates are likely to remain at low levels for at least the next six months as central bankers do not want to risk having a fragile economic recovery reverse course. The Fed has allocated $1.25 trillion to support the mortgage-backed securities market which is seen as essential in maintaining low mortgage rates. Low rates are a crucial factor in the transition to a long-term economic recovery and are critical to improving home affordability and generating sales within the housing sector. Home prices have been driven down sharply by the over-supply of foreclosure units available as only slightly over 35% of sales generated in recent months have involved non-distressed properties. The incentive provided through the first time buyer tax credit program has allowed home buyers to take advantage of an $8,000 credit. That program, in conjunction with sustained lower fixed interest rates, have helped stabilize housing demand, though much of it remains geared towards lower-end properties under $250,000 which are favored by both investors and first-time buyers.

Applications for home refinances increased over 17% last week as fixed interest rates fell below 5% for the first time since May of this year. The share of refinance loans overall, accounted for almost 64% of all mortgage loans originated. Purchase loan activity also grew 5.6% as the percentage of government-insured loans hit record levels not seen since the early 1990s. Disappointing existing home sales numbers were reported for the month of August as purchases fell 2.7%, yet they were still up almost 3.5% from the same period last year, having attained the second-highest level in the prior 23 months. Even better news, the inventory of unsold homes fell by 11% as it would currently take approximately 8.5 months to eliminate the supply of homes currently available for sale on the market. This is at the lowest level since April 2007 and a supply of 7 months of inventory has been historically associated with stabilizing homes prices.

CURRENT MORTGAGE RATES DOWN FOR THIRD CONSECUTIVE WEEK

Shorter-Term Rates Are Mixed

Sept. 17, 2009 - McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.04 percent with an average 0.7 point for the week ending September 17, 2009, down from last week when it averaged 5.07 percent. Last year at this time, the 30-year FRM averaged 5.78 percent. The last time the 30-year FRM was lower was the week ending May 28, 2009, when it averaged 4.91 percent.

The 15-year FRM this week averaged 4.47 percent with an average 0.6 point, down from last week when it averaged 4.50 percent. A year ago at this time, the 15-year FRM averaged 5.35 percent. This is the lowest the 15-year FRM has been since Freddie Mac started tracking it in 1991.

MORTGAGE RATES CURRENTLY DOWN AMID CONCERNS OVER LABOR MARKET

July 9, 2009-McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM)averaged 5.20 percent with an average 0.7 point for the week ending July 9, 2009, down from last week when it averaged 5.32 percent. Last year at this time, the 30-year FRM averaged 6.37 percent.

The 15-year FRM this week averaged 4.69 percent with an average 0.7 point, down from last week when it averaged 4.77 percent. A year ago at this time, the 15-year FRM averaged 5.91 percent.

CURRENT MORTGAGE RATES MOSTLY FLAT AMID MIXED ECONOMIC NEWS

June 25, 2009 McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.42 percent with an average 0.7 point for the week ending June 25, 2009, up from last week when it averaged 5.38 percent. Last year at this time, the 30-year FRM averaged 6.45 percent.

The 15-year FRM this week averaged 4.87 percent with an average 0.7 point, down from last week when it averaged 4.89 percent. A year ago at this time, the 15-year FRM averaged 6.04 percent.

NOT MUCH CHANGE IN FIXED MORTGAGE RATES

But ARM Rates Are Lower

May 21, 2009 Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.86 percent with an average 0.6 point for the week ending May 14, 2009, up from last week when it averaged 4.84 percent. Last year at this time, the 30-year FRM averaged 6.01 percent.

The 15-year FRM this week averaged 4.52 percent with an average 0.6 point, up from last week when it averaged 4.51 percent. A year ago at this time, the 15-year FRM averaged 5.60 percent.

“Interest rates for fixed rate mortgages were little changed this week following the release of April’s employment figures,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The economy lost 539,000 jobs, less than the monthly job loss of the past five months, and the unemployment rate rose to 8.9 percent. ARM rates, however, fell slightly over the period.

Current Mortgage Rates Hit Record Low, Borrowing Spikes, and Home Sales Increase

March 26, 2009 - Long-term mortgage rates hit a record low this week, and the market finally heard some good news about the state of the housing union.

After the Federal Reserve announced an unprecedented plan to purchase Treasury securities and pump over $1 trillion into the U.S. financial system, the rate on 30-year fixed-rate mortgages hit an average of 4.85% for the week ending March 26. This is the lowest rate since Freddie Mac’s weekly survey began in 1971. (continued below)

(from above) At the same time, 15-year fixed-rate mortgages hit a record low of 4.58%, the lowest since Freddie Mac began tracking the mortgage option in 1991. Adjustable rate mortgages also dipped in borrowers’ favor.

The announcement by the Federal Reserve sparked these interest rate deductions, and borrowers have sat up and taken notice. Applications to refinance existing mortgages rose 41.5% last week, according to the Mortgage Bankers Association. All mortgage applications, including refinance and new purchases, were up a seasonally adjusted 32.2%.

The news on interest rates and increased borrowing applications this week coincided with the release of some more slightly encouraging news about the housing market. New home sales nationwide rebounded by 4.7% in February, according to the Commerce Department. After hitting a record low in January, sales of new homes rose to a seasonally adjusted annual rate of 337,000 last month, higher than initial economist expectations.

At the same time, existing home sales rose 5.1% in February, boosted by “deep” discounts, according the National Association of Realtors. It was the largest percentage gain since July 2003.

Accounting for the majority of the sales were distressed homes, including foreclosed properties or short sales, all selling for 20% below normal market prices. As a result, the media sales price of existing homes dropped 15.5% in the past year to $165,400, the second-largest year-over-year decline on record.

This continuation of home price drops, along with rising inventories of unsold homes, continue to hold the housing market in a vise grip. But the increase in sales, and the surge in borrowing due to interest rate cuts, are some good news to hang on to.

For Further Reading:
Existing-home sales rise on 'deep' discounting
New-home sales rebound after record low in January
Mortgage rates hit record low 30-year fixed-rate mortgage now averaging 4.85%: Freddie Mac

Mortgage Rates Little Changed This Week

03-05-2009 - McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.07 percent with an average 0.7 point for the week ending February 26, 2009, up from last week when it averaged 5.04 percent. Last year at this time, the 30-year FRM averaged 6.24 percent.

The 15-year FRM this week averaged 4.68 percent with an average 0.7 point, unchanged from last week when it averaged 4.68 percent. A year ago at this time, the 15-year FRM averaged 5.72 percent.

Current Mortgage Rates Current Last Week 30 Year Fixed 15 Year Fixed 5/1 ARM Get this widget

Lower Fixed Mortgage Rates Translate Into Large Volume of Refinancing

02-12-2009 McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.16 percent with an average 0.7 point for the week ending February 12, 2009, down from last week when it averaged 5.25 percent. Last year at this time, the 30-year FRM averaged 5.72 percent.

The 15-year FRM this week averaged 4.81 percent with an average 0.7 point, down from last week when it averaged 4.92 percent. A year ago at this time, the 15-year FRM averaged 5.25 percent.

"Interest rates for 30-year fixed-rate mortgages are almost 1.5 percentage points below 2008's peak set on July 24, 2008, offering many homeowners an incentive to refinance," said Frank Nothaft, Freddie Mac vice president and chief economist. "This would translate into a monthly payment savings of around $188 on a $200,000 mortgage.

Current 30 Year Rates Fall For Tenth Consecutive Week Setting Another New Low

1-08-09 McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.01 percent with an average 0.6 point for the week ending January 8, 2009, down from last week when it averaged 5.10 percent. Last year at this time, the 30-year FRM averaged 5.87 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.

30 Year Fixed Rates Fall For Ninth Consecutive Week Setting Another New Low

12-31-08 McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.10 percent with an average 0.7 point for the week ending December 31, 2008, down from last week when it averaged 5.14 percent. Last year at this time, the 30-year FRM averaged 6.07 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.

The 15-year FRM this week averaged 4.83 percent with an average 0.7 point, down from last week when it averaged 4.91 percent. A year ago at this time, the 15-year FRM averaged 5.68 percent. The 15-year FRM has not been lower since March 25, 2004, when it averaged 4.70 percent.

30 Year Fixed Rates Drop Further

12-24-08 McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent with an average 0.8 point for the week ending December 24, 2008, downfrom last week when it averaged 5.19 percent. Last year at this time, the 30-year Fixed Rate Mortgage averaged 6.17 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.

The 15-year FRM this week averaged 4.91 percent with an average 0.7 point, down from last week when it averaged 4.92 percent. A year ago at this time, the 15-year FRM averaged 5.79 percent. The 15-year FRM has not been lower since April 1, 2004, when it averaged 4.84 percent.

"Interest rates on 30-year fixed-rate mortgages eased for the eighth straight week and set another record low since Freddie Mac's survey began in 1971," said Frank Nothaft, Freddie Mac vice president and chief economist.

Current 30 year fixed rate mortgage at 37 year low

12-18-08 "Interest rates for 30-year fixed-rate mortgage rates fell for the seventh consecutive week, moving these rates to the lowest since the survey began in April 1971," said Frank Nothaft, Freddie Mac chief economist. "The decline was supported by the Federal Reserve announcement on Dec. 16, when it cut the federal funds target to a record low and stated it stood ready to expand its purchases of mortgage-related assets as conditions warrant."

Interest Rate Cut to 4.5% Proposed for New Home Loans;
30 Year Fixed Rates Fall to 4 Year Low

      Dec 11, 2008 - In a new proposed plan to spur home sales, boost the housing market, and stem foreclosures, the Treasury       Department is considering cutting mortgage rates for new home loans to 4.5%. (full story continued below)

The plan would work with Fannie Mae and Freddie Mac to offer mortgages with these low rates, undercutting current mortgage rates by nearly 1 percentage point. The Treasury Department is considering the plan as part of their continuing efforts to cut down on foreclosures, and find a solution without bailouts.

Industry analysts applauded the plan, noting that lower rates would provide support to the housing market and new buyers. But some wished the plan would go further, offering refinancing opportunities to those homeowners in a bind.

In other interest rate news, 30-year mortgage rates continued their decline and hit the lowest rates in 4 and ½ years. Freddie Mac said fixed rates on 30-year mortgages averaged 5.47 percent for the week ending Dec. 11.

Mortgage rates have been falling since November 25th, when the current administration announced an additional $800 billion pumped into credit markets in efforts to unfreeze consumer and mortgage lending. The administration decided to buy up to $600 billion of mortgage-related securities and other debt issued by Fannie, Freddie and the Federal Home Loan Banks as part of this cash infusion. Rates dropped below the 6 percent mark after that announcement, and have been dropping since. The new 30-year rate has not been this low since March 25th, 2004, when it averaged 5.40 percent.

Some analysts are predicting that continuing government efforts to ease the credit crunch and jumpstart the housing market could eventually push mortgage rates below 4%. The drastically low rate would be a direct result of housing demand plummeting. With the economy in dire straits, total home sales in 20 major U.S. markets dropped 65 percent in October over 2007 figures. Cancellations of new home purchases have skyrocketed as well.

Mortgage Rates - 30 Year Fixed Mortgage Rates & 15 Year

4.5% Mortgage Rates Being Considered

Treasury may be considering mortgage help

WASHINGTON, Dec. 4 (UPI) -- The U.S. Treasury Department is considering direct intervention in the mortgage industry to drive down costs and lift the market, officials said.

Under the plan, the department would offer to buy securities used to finance newly issued home loans but lenders would have to set extremely low interest rates to participate in the program, sources told The Washington Post.

The plan would use the Federal National Mortgage Association (OTCPK:FDRNP) and the Federal Home Loan Mortgage Corp. (OTCPK:FREJO) to encourage banks to lend at rates as low as 4.5 percent, more than 1 percentage point lower than current mortgage rates for a 30-year, fixed mortgage, The Wall Street Journal reported.

The cost of the plan, still in development, and a funding source remained undefined, the Post reported. One possibility is for the Treasury to raise money by issuing bonds at 3 percent interest, allowing the government to turn a profit since it would be buying securities that pay 4.5%.

Treasury officials told the Journal the plan could halt the skid in home prices by enabling qualified borrowers to afford bigger loans, which would increase demand and raise home values.

Borrowers would have to qualify for a loan guaranteed by Fannie Mae (NYSE:FNM), Freddie Mac (NYSE:FRE) or the Federal Housing Authority, officials said, so the government could steer clear of risky loans.

Treasury efforts to lower rates on new mortgages would be in conjunction with a Federal Reserve plan to buy $500 billion in existing mortgage-backed securities issued by Fannie Mae and Freddie Mac and $100 billion worth of mortgage giants' debt, the Post said.

Fed Cuts Key Interest Rate to 1%: Trick or Treat?
Source: Informa Research Services (An ERATE partner)

(Oct 29) Today, the Federal Open Market Committee announced that it would whittle its key interest rate by 50 basis points down to 1.00%.  The last time the Fed funds rate was this low was June of 2003.  But is this a terrible trick or a splendid treat for consumers?

This key interest rate, in turn affects Prime rate, which is typically lowered to ease the credit market and make it cheaper for consumers to borrow money.  The Prime rate is often used as an index in calculating short term loans such as auto loans, home equity lines of credit, and credit cards.

Whether or not this cut is going to improve the current struggling economy is anyone’s guess.  For instance, historically, mortgage rates tended to correlate with the Fed funds rate, but as of late, this has not been the case.  The best way to keep an eye on mortgage and equity rates is to check convenient rate tables regularly.

The effects of the Fed’s decision will have to be watched carefully, but by staying educated and vigilant of what current rates are, you can ensure you get the sweetest deal available in any economic situation. Search for Mortgage Rates Current.

Just One Click = Current Mortgage Rate Charts

What the Fed’s Coordinated Emergency Rate Cut Means for Consumers Source: Informa Research Services (An ERATE partner)

Oct 8, 2008 - Today, as part of a worldwide effort to ease the effects of the current economy, the Federal Reserve Board enacted an emergency interest rate cut of 50 basis points.  The Fed funds rate is the key interest rate used to influence market conditions.  This cut leaves the Fed rate at 1.50%.  Informa Research Services, Inc. informs consumers about what to do in these rare economic circumstances.

This is the second time this year the Fed rate has been adjusted prior to a scheduled Fed Board meeting.  The last unscheduled cut was made January 22 when the key interest rate was cut by 75 basis points to 3.50%.

While there is no direct link between the Fed rate and mortgage rates, historically, mortgage rates have tended to follow the Fed rate.  However, as of late, that has not been the case.  Thus, the best bet for consumers is to check online rate tables regularly to keep an eye on where rates are and where they might be going.

If mortgage rates fall as a result of this move by the Fed, it may be a good opportunity for consumers to purchase or refinance their home.  First time homebuyers may find it is a good time to purchase, especially with homes becoming more affordable.  To ensure they are getting the best deal for their unique situation, consumers should do their research and shop around before choosing a loan product.

Consumers should take their time and do their research before rushing into any lending decisions.  They should look for the best possible deal that suits their financial situation.

Just One Click = Current Mortgage Rate Charts

Freddie and Fannie Won't Fall, But Will Mortgage Rates?

Source: Informa Research Services (An ERATE partner)

In light of the U.S. Department of Treasury's action to place government sponsored enterprises, Freddie Mac and Fannie Mae, into a conservatorship, one has to wonder, "What does this mean for me?"

Many experts have speculated that this decision could lead to lower rates on various mortgage products.  Thus far, there has been no overwhelmingly significant change in rates overall.  Over the past week, the average rate 30-year fixed rate mortgages offered by major financial institutions have dropped 22.6 basis points from 6.761% to 6.535% according to Informa Research Services.  If rates continue to drop due to this takeover, this may create some excellent opportunities for homeowners and prospective buyers alike.

For homeowners who have been waiting to refinance their mortgage, this may be a good opportunity to take advantage of lower rates.  To ensure you secure the best deal, be sure to shop for the best rates.

To qualify for the best rates, be sure to maintain excellent credit.  To keep tabs on your credit, look into free credit monitoring tools, such as Credit Karma (www.creditkarma.com).  Credit Karma allows users to securely check and monitor their credit score on a regular basis.

No one can say for sure exactly how the takeover of Fannie Mae and Freddie Mac will affect rates long term, but the best way to stay on top of rate trends is to check rates regularly.  By using online rate comparison tables, checking rate trends is only a click away!

Just One Click = Current Mortgage Rate Charts

Rate Lock Key to Staying a Step Ahead of Rising Mortgage Rates
Source: Informa Research Services (An ERATE partner)

According to Informa Research Service’s Interest Rate Review®, the national average APR on a 30 year fixed mortgage rose 74 basis points over the past 6 months (from 6.00% to 6.74%).  Because we are in a rising rate environment, how can you ensure you get the best rate on your mortgage home loan?  Lock your rate.

When beginning your loan application process, you have the option to either lock or float your rate.  By locking your rate, you are opting to commit to the rate and points option available at the time of the lock.  Locking in your rate is one way to ensure the rate on your mortgage is not higher than expected upon loan closing.  This option can help offset the volatility of an uncertain market.

The other option is to float your rate.  Floating your rate means that you choose to lock-in your interest rate at some time after application, but before settlement.  The borrower becomes more vulnerable to market volatility and fluctuations in rates.  The advantage would come if you wait to lock-in and rates decrease, you may get a more favorable rate.

In a rising rate environment, locking in your desired rate early guarantees that your rate does not rise during your loan application process.
 
You should also consider the rate environment when you are choosing a type of mortgage product to finance your home purchase.  Even though their introductory rates may seem very attractive, if you opt for an adjustable rate mortgage (ARM), you may be slammed with a huge rate increase in the future when your rate adjusts if rates continue their upward climb.  Because of this, a fixed rate mortgage may be the smarter choice if rates continue to rise.  To stay on pace with current mortgage rate trends, refer to online rate trending graphs and check regularly.

Even though rates are rising, locking in a rate early and choosing the correct mortgage product should help reduce some of the risk associated with getting a mortgage in the current rate environment.  You should always be sure to shop around to find the best rates and terms that meet your needs.  Find the best deal locally by searching online rate tables.  Be sure to consult your loan adviser to ensure you are getting the best rate and product for your individual situation.

Fannie Mae & Jumbo Mortgage Rates     Just One Click! = Current Rate Chart

No Fed Cut?  Stop Twisting My ARM!
Source: Informa Research Services (An ERATE partner)

Today, for the first time in nine months, the FOMC announced that it would not lower the Fed Funds Rate, the key interest rate set by the Federal Reserve.  So what does this mean for mortgage rates?

While there is no direct tie between the Fed Funds rate and mortgage rates, historically the two rates tend to correlate over time.  But as of late, this trend has not held true.  For instance, even though the Fed lowered their key interest rate 25 basis points on April 30, the national average rate on a 5/1 ARM continued to rise 51 basis points from 5.29% on May 6 to 5.80% on June 24 (Source: Informa’s Interest Rate Review®).

Save money by refinancing before rates climb higher
If this trend continues, how long can you afford to wait before refinancing out of your adjustable rate mortgage into a fixed rate loan?  A 50 basis point increase in your mortgage rate from 6.00% to 6.50% could increase your monthly principal and interest payment on a $200,000 mortgage from $1,199 to $1,264 a month.  Securing the lower rate in this scenario could save you $65 a month, or $780 a year.  Shop online to find the best available rates in your area.

Since mortgage rates seem to be rising despite Fed interest rate cuts, one smart way to keep up on how rates are changing is to check rate comparison tables regularly.  Checking national average rates can give you a quick snapshot of how rates are changing, and perhaps, some insight into where they are going.

Times are Anything But Boring for the Fed

As the scheduled FOMC meeting gets underway on June 24th-25th, what direction should the Fed decide to take next?  It’s quite a dilemma at the Fed, for if they were to raise rates, that could further dampen the condition of an already weakened economy and yet to lower rates again, would only serve to ignite the inflationary pressures evidenced by high fuel, food and many other commodities prices, it is also apparent in the unstable U.S. dollar.  It would seem that the Fed is far more likely to tip the scale in favor of addressing the threat of inflation rather than that of the deteriorating economy.  The sinking dollar, in conjunction with surging energy prices, may pose a more serious threat to the country’s overall economic health at this time.  However most Fed watchers have not expected a rate increase to come out of the Fed until the end of the year, or possibly into next year, following the November elections.  Currently it seems that nothing can go right with the economy sinking, inflation soaring and natural disasters mounting (such as the massive flooding occurring in the mid-west) while the financial markets are tumbling, all occurring in the midst of an election year where a wait and see approach may prevail as the country changes course both politically as well as economically. 

Fannie Mae & Jumbo Mortgage Rates     Just One Click! = Current Rate Chart

Will Last Week’s Fed Cut Help Lower Mortgage Rates?
Source: Informa Research Services (May 7, 2008) (An ERATE partner)

The quick and easy answer is that you should see a slight drop in adjustable rate mortgage (ARM) rates but fixed rates should remain relatively unchanged.

In loose correlation with the fed rate, ARM rates peaked in September 2007 (with the national average for a Jumbo 3/1 ARM at 6.848%) and fell by an average of 16 basis points in October 2007.  Rates stabilized in the three months following, averaging 6.389% for the Jumbo 3/1 ARM’s nationally.  The lowest mortgage rates occurred in February 2008 (5.995%), which mirrored rates from the previous year in March 2007 (5.994%).  Overall, March 2008 rates are displaying a slight increase (of about 0.125%) compared to rates only one year ago.

Based on the latest fed rate cut, adjustable mortgage products may remain stable or reflect a slight change.  Use convenient rate tables to stay updated on the rates currently available in your area.

Fixed-Rate Mortgages: Types and Benefits

These mortgages have always been a classic and popular option for their simplicity. When a borrower takes out a fixed-rate mortgage, they are receiving a locked interest rate for the term of the mortgage. No adjustable, changing rates; no movement to track or fret over. Over the life of this home loan, the borrowers pay a monthly payment that never changes, allowing homeowners to budget better and be prepared.

A monthly payment for a fixed-rate mortgage is comprised of two elements. Borrowers pay towards the principal, or the actual loan amount. They also pay interest on the principal, with the amount determined by the fixed interest rate. This interest is a tax-deductible expense, providing homeowners a significant advantage come tax-time. Over time, by paying towards the principal homeowners build equity, or ownership, in their home. Eventually, equity can be accessed as a source of funds, used for home repairs, college costs, vacations, or other options.

The most common terms for a fixed-rate mortgage are fifteen and thirty years, but in recent years other options have become available, including 10-, 20-, 40-, and even 50-year terms.  Common fixed-rate mortgages have their own advantages and disadvantages:

Fixed-rate mortgages are particularly helpful and practical for homeowners who intend to stay in their homes for a long or indefinite amount of time.

The main draw of fixed-rate mortgages can also become their drawback over time. Locking in an interest rate for a fixed-rate mortgage can be a great deal, as interest rates fluctuate and rise. But what happens when mortgage rates drop, and your fixed rate is costing you a bundle? It’s good to remember that fixed-rate mortgage borrowers do have options. Refinancing is available to those with good credit who pay their mortgage on time, and can take advantage of these lower rates. 

Fannie Mae & Jumbo Mortgage Rates     Just One Click! = Current Rate Chart

Fed Rates Keep Falling on My Head:
What the Fed Rate Cuts Mean for Your Savings and Mortgage

(Jan 30, 2008) Today, the Fed slashed the Fed funds rate by 50 basis points.  Like most things, dropping rates are a game of give and take; the lowering of Fed rates can be beneficial for some parts of your financial life and detrimental for others.  So how exactly can you make the most of the most recent Fed rate cuts?

What does the Fed rate cut mean for my mortgage?
Not all mortgages are directly linked to the Fed rate, but adjustable rate mortgages (ARMs)are one type that is influenced by the Fed rate.  Thus, ARM rates were affected by last week’s drastic Fed rate drop.  In fact, just within the past week since the last Fed cut, the APR on a 5/1 ARMdropped from 5.65% to 5.25% based on Informa’s National Averages (Source: Interest Rate Review®, Informa Research Services).

What about my other loans?
Because the Prime Rate is the key index used to determine the variable rates, such as credit cards and home equity lines of credit (HELOCs), the rates associated with these types of loans can be affected by the change.

And what is going to happen to my savings efforts?
Since the Fed’s rate cut last Tuesday, average deposit product interest rates have dipped as expected, but there has been no uniform decrease across the board.  For example, the interest rates on 3-, 6-, 12-, 24-, and 36-month certificates of deposit (CDs)(at $25,000) dropped an average of 20-30 basis points according to Informa’s National Averages report.  On the other hand, the rates for checking accountsdropped only 2 basis points (Source: Interest Rate Review®, Informa Research Services).

Despite some drastic rate drops due to the emergency Fed rate cuts last Tuesday, it is very unclear whether or not the most recent reduction will incur the same reaction.  Because today’s Fed rate cut was widely anticipated, some of the slashed rates over the past week may have been anticipated and incorporated into the rates offered today.  However, one thing that may be expected is the volatility of today’s rate environment.

“One thing we’ve noticed is that [financial institutions] are quicker to drop rates than to raise them,” said Ray Montague, Deposit Research Manager at Informa Research Services.  Looking at historical trends, when the Fed drops rates, deposit product rates tend to follow the Fed’s moves very closely and drop rates quickly.  On the other hand, when the Fed raises rates, deposit product rates tend to stray behind and raise their rates slowly.

So what now?  What should I do with my savings and deposits?
Despite falling rates, there is still hope for those looking to save.  Regardless of where Fed rates stand, financial institutions will continue to offer promotional and teaser rates to attract new customers.  If you are finding it difficult to judge what is competitive in the current rate environment, remember to use the sorting feature available on many of the online rate tables.  Additionally, checking ratesregularly and staying informed of what rate changes mean for you can help you properly gauge what is best for your situation.

About 30 Year and 15 Year Fixed Mortgages

One of the most popular types of mortgages is the 30 year fixed-rate mortgage. This loan is usually the easiest to qualify for, and provides the maximum interest deduction at tax time. The interest rate stays the same over the life of the loan, which provides unchanging, low monthly payments. Over time, borrowers gain equity in the home as they pay down the principal, or actual loan amount. For borrowers who intend on staying in the home for a long time, this mortgage is particularly helpful and practical. A disadvantage of the 30-year fixed-rate mortgage is paying more interest over time than shorter-period loans.

A 15 year fixed rate mortgage features interest payments fixed at a specified level for specified period of time (15 years), meaning you will pay the same amount of interest for a specified term. This allows you to budget more effectively at the start of your mortgage. Among fixed-rate loans, it offers the lowest amount of interest paid over the term of the loan, while providing for a never-changing monthly payment schedule. The drawback for 15-year fixed-rate mortgages is the increased monthly payments, as principal and interest is condensed over a shorter period of time.

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