Mortgage Rates Start To Rise
After falling for the last 6 weeks mortgage rates started to rise this week
. The 30 year rate rose from 4.87 to 4.92. The 15 year mortgage rose from 4.33 to 4.37. Both arms rose as well with the 5 year arm rising from 4.35 to 4.38 and the 1 year arm rising from 4.53 to 4.60. Below are mortgage rates for the last several weeks along with mortgage rates from March 19, 2009.Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60
Oct 08, 2009
30-yr 4.87 15-yr 4.33 5-yr ARM 4.35 1-yr ARM 4.53
Oct 01, 2009
30-yr 4.94 15-yr 4.36 5-yr ARM 4.42 1-yr ARM 4.49
Sep 24, 2009
30-yr 5.04 15-yr 4.46 5-yr ARM 4.51 1-yr ARM 4.52
Sep 17, 2009
30-yr 5.04 15-yr 4.47 5-yr ARM 4.51 1-yr ARM 4.58
Mar 19, 2009
30-yr 4.98 15-yr 4.61 5-yr ARM 4.98 1-yr ARM 4.91
Overall its not that interesting that rates moved up. Moving up .05 points is not that significant. For the last few months the speculation has been that rates are going to eventually move up. Additionally, the federal government has been pulling back on the amount of mortgage securities it was buying (which was pushing mortgage rates down). So the question is whether this weeks rise in mortgage rates was just normal volatility or the beginning of the steady rise in mortgage rates that some have been predicting. At this point it's an impossible question to answer for the most part we will have to wait and see.
In addition to rates it's also interesting to look at mortgage payments. We took today's rates and determined the mortgage payment on a 200k loan. We also did the same thing with rates from October 1st (2 weeks ago) and March 12, 2009 (6 months ago).
Oct 15
30-yr $1063.88
15-yr $1516.73
5-yr ARM $999.16
1-yr ARM $1025.28
Oct 01
30-yr $1066.32
15-yr $1515.71
5-yr ARM $1003.88
1-yr ARM $1012.18
Mar 12
30-yr $1077.31
15-yr $1544.33
5-yr ARM $1072.42
1-yr ARM $1049.33
Overall looking at mortgage rates/mortgage payments from 2 weeks and 6 months ago we are not seeing a lot of movement. Compared to March 12 (6 months ago) a mortgage payment on a 200k loan would only be $13.42 less a month or 1.24 percent less. By comparison if rates rise to 7 percent (historically about average) a mortgage payment would be 266.72 more a month or a rise of 25%. While a rise to 7 percent seems like a lot many experts are expecting rates to move up to 9 or 10 percent.
So what is our advice for people looking for a mortgage? First it's probably best to start looking for a mortgage early on in the home buying process. It's more difficult to get a loan and waiting to the last minute is not advisable. Additionally, it's probably advisable to lock in a rate earlier instead of later. While mortgage rates could fall its doubtful they could drop by much at this point. On the other hand it's possible that mortgage rates could move up dramatically. So there is more to lose than gain by waiting to lock in on a mortgage. If mortgage rates do start to rise dramatically it could deal a serious blow to the real estate recovery we are currently seeing in several markets around the country.
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