Mortgages Rates Shoot Up

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Mortgage rates shot up this week with the 30 year rate moving from 4.81 to 4.94

. Rates also moved up substantially last week. So now in the last two weeks rates have moved from 4.71 to 4.94. This is highest the 30 year rate has been since November 5th. Although the other mortgage products have moved up in the last two weeks they have not risen as dramatically as the 30 year rate. Below are rates from the weeks from Nov 19, 2009 to Dec 17, 2009

Dec 17, 2009

30-fixed 4.94 15-fixed 4.38 5-ARM 4.37 1-ARM 4.34

Dec 10, 2009
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30-fixed 4.81 15-fixed 4.32 5-ARM 4.26 1-ARM 4.24

Dec 03, 2009

30-fixed 4.71 15-fixed 4.27 5-ARM 4.18 1-ARM 4.25

Nov 26, 2009

30-fixed 4.78 15-fixed 4.29 5-ARM 4.18 1-ARM 4.35

Nov 19, 2009

30-fixed 4.83 15-fixed 4.32 5-ARM 4.25 1-ARM 4.35

For the last few months the 30 year rate has always been the obvious choice. Since 30 year rates have risen .23 points in the last two weeks while 15 year rates have only risen .11 points and the 1 year arm has only risen .10 points, now it's becoming less obvious. I would still think 30 year rates is still probably the default choice for most homeowners there are probably rare circumstances where it might make more sense to look at a 15 year fixed mortgage or to look at a 5 or 1 year arm. If one is sure that they are going to move in a few years it might then make sense to look at other options. If one is not sure what they are going to do then with rates still historically low its probably better to lock in long term with the 30 year rate.

In addition to straight mortgage rates it's always good to look at actual mortgage payments. We took today's rates and used a mortgage calculator to translate them into a payment on a 200,000 loan. We also did the same thing with rates from December 3rd and June 18th.

Dec 17

30-year $1066.32

15-year $1517.74

5-year ARM $997.98

1-year ARM $994.44

Dec 03

30-year $1038.47

15-year $1506.58

5-year ARM $975.7

1-year ARM $983.87

Jun 18

30-year $1120.56

15-year $1570.15

5-year ARM $1069.97

1-year ARM $1067.53

Looking at the 30 year mortgage a payment on a 200k mortgage has increased $27.84 a month for an increase of 2.68 percent. So while rates are still low by historical standards they are somewhat higher than two week ago when rates hit an all time low.

So what are rates going to do moving forward? Although rates are expected to rise long term after rising so quickly in the last two weeks its likely we could see a bit of a pull back in rates. Long term though we should expect to see rates substantially higher in the next year or two.

by: Ki Gray

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