Mortgage Rates Reach New All Time Lows

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Last week mortgage rates matched their all time low of 4.78

. This week rates fell even further reaching a new low of 4.71. To put this in some context in terms of historical mortgage rates before the last 12 months the all time low was 5.24 which was reached in the middle of 2003. Today's rates are a full half point below that.

Although the 30 year rate is the most significant of the 4 major mortgage products the other 3 fell as well. The 15 year mortgage hit a new all time low for the second week in a row falling from 4.29 to 4.27. The 5 year arm reached a new all time low of 4.18 last week and equaled that mark this week. The 1 year arm is the only mortgage product not currently at an all time low. It did fall from 4.35 to 4.25. Below are rates from the weeks from Nov 05, 2009 to Dec 03, 2009 along with rates from a year ago.

Dec 03, 2009

30- 4.71 15- 4.27 5-ARM 4.18 1-yr ARM 4.25
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Nov 26, 2009

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

Nov 19, 2009

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

Nov 12, 2009

30- 4.91 15- 4.36 5-ARM 4.29 1-ARM 4.46

Nov 05, 2009

30- 4.98 15- 4.40 5-ARM 4.35 1-ARM 4.47

Jun 04, 2009

30- 5.29 15- 4.79 5-ARM 4.85 1-ARM 4.81

Dec 04, 2008

30- 5.53 15- 5.33 5-ARM 5.77 1-ARM 5.02

So what is the significant of new record lows? As we can see in the above numbers rates have been low for awhile. Rates have been below 4.85 for the last 2 weeks. That said hitting a new all time low is significant because it will generate some news and headlines, and a bunch of headlines about all time low mortgage rates could generate some buyer activity.

So with multiple mortgage products hitting all time lows which do we recommend? Although the arms have become more attractive since falling over half a point over the last 6 months the 30 year rate seems like the logical choice. With rates at all time lows it's simply too hard to pass up locking in for a long period of time.

To see the effect of the falling rates we took today's rates and translated them into a payment on a 200k house. We did the same thing with rates from 2 weeks ago and rates from a year ago.

Dec 03

30-yr $1038.47

15-yr $1506.58

5 ARM $975.7

1 ARM $983.87

Nov 19

30-yr $1052.96

15-yr $1511.65

5 ARM $983.87

1 ARM $995.62

Dec 04 2008

30-yr $1139.34

15-yr $1616.18

5 ARM $1169.68

1 ARM $1076.08

For a 200k loan a mortgage is 9.7% less (or $100.87 a month) cheaper today than a year ago. So what do we expect moving forward? Although we keep expecting rates to move up eventually and rates keep moving down they cannot move down much farther. It's hard to know if rates are moving up or down over the next few weeks but the general view is that we should be seeing higher rates 3 to 4 months from now.

by: Ki Gray

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