The 30 year rate fell slightly this week moving from 4.99 to 4.98. This is the 4th week in a row where rates have fallen. Although rates have been falling for 4 weeks in a row all the drops have been slight. Four weeks ago rates the 30 year rate stood at 5.14 and today it stands at 4.98 for a total drop of only .16 points. The other major mortgage products fell as well but all the drops were similarly quite small. The 15 year dropped from 4.40 to 4.39. The 5 and 1 year arms dropped from 4.27 to 4.25 (5 year arm) and 4.32 to 4.29 (1 year arm). Below are rates from the weeks from Dec 31, 2009 to Jan 28, 2010 and rates from July 30, 2009 (six months ago).
Jan 28, 2010
30-fixed 4.98 15-fixed 4.39 5-yr ARM 4.25 1-yr ARM 4.29
Jan 21, 2010
30-fixed 4.99 15-fixed 4.40 5-yr ARM 4.27 1-yr ARM 4.32
Jan 14, 2010
30-fixed 5.06 15-fixed 4.45 5-yr ARM 4.32 1-yr ARM 4.39
Jan 07, 2010
30-fixed 5.09 15-fixed 4.50 5-yr ARM 4.44 1-yr ARM 4.31
Dec 31, 2009
30-fixed 5.14 15-fixed 4.54 5-yr ARM 4.44 1-yr ARM 4.33
The expectation for the last month or two has been that rates would increase and rates have steadily defied this expectation. Moving forward the expectation is still that long term rates are going to increase. If they fall its doubtful they will fall much. With the current rate of 4.98 just slightly above the all time low of 4.71 we saw at the end of 2009. When and how fast rates will rise will depend on how committed the US government is to stopping rates from rising. Some believe that a fast rise in mortgage rates could derail the US economic recovery so the government has been paying attention to rates to not let them rise to quickly. Even with government involvement the general expectation is still that rates will be higher in a year.
In addition to rates we also like to look at mortgage payments since these numbers are what really matters in the end for people obtaining a long. We took today’s rates and translated them into a mortgage for a 200k loan. We also did the same thing with rates from January, 14 2010 and rates from July, 30 2009 (six months ago).
Jan 28
30-year $1071.19
15-year $1518.76
5 ARM $983.87
1 ARM $988.56
Jan 14
30-year $1080.98
15-year $1524.88
5 ARM $992.09
1 ARM $1000.34
Jul 30
30-year $1104.4
15-year $1549.47
5 ARM $1043.29
1 ARM $1049.33
As we can see while rates have fallen in the last 2 weeks the effect on mortgage is pretty slight. A mortgage payment would have decreased less than 1 percent from 2 weeks ago (.009 percent). So what is our advice to people looking for a mortgage? I would lock in sooner rather than later. It’s hard to know if rates while move up or down in the near future. But while there is a small chance of rates dropping drastically if the economy suddenly shows signs of strength there is a chance rates could move up quickly.
Ki lives in Austin, Tx. He writes frequently about mortgage rates and his website provides a mortgage rate widget along with free mortgage calculators. His site also provides a graphical search for Austin Tx real estate.
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