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Mortgage Rates Fall For The 12th Week In A Row
| This is getting just ridiculous. This is now the 12th week in a row where mortgage rates have fallen. Ok one small caveat to that this is the 12th week where the 30 year mortgage rate has fallen. But in the current environment the 30 year mortgage rate is almost the only mortgage product that matters. The 30 year rate fell this week from 5.01 to 4.96. The 5 year arm fell (from 5.49 to 5.25) and the 1 year arm declined slightly (from 4.95 to 4.89). But frankly who cares, as long as these rates stay above the 30 year mortgage (i.e. the 5 year arm) or just slightly below the 30 year mortgage (the 1 year arm) there is no real reason to consider these mortgage products. Rates for a 15 year mortgage rose slightly from 4.62 to 4.65. Below are rates for the last few weeks. Jan 15, 2008 30-yr 4.96 15-yr 4.65 5-yr ARM 5.25 1-yr ARM 4.89 Jan 08, 2008 30-yr 5.01 15-yr 4.62 5-yr ARM 5.49 1-yr ARM 4.95 Dec 31, 2008 30-yr 5.10 15-yr 4.83 5-yr ARM 5.57 1-yr ARM 4.85 Dec 24, 2008 30-yr 5.14 15-yr 4.91 5-yr ARM 5.49 1-yr ARM 4.95 Dec 18, 2008 30-yr 5.19 15-yr 4.92 5-yr ARM 5.60 1-yr ARM 4.94 So I wanted to look at actual mortgage payments in addition to mortgage rates. When we talk of rates dropping sometimes its interesting to translate those rate drops into real dollars. We translated today's rates into a mortgage payment for a 200k loan. We also looked at rates from two weeks ago and rates from October 30th (this was the date when rates first started to fall). Jan 15 30-yr $1068.75 15-yr $1545.36 5-yr ARM $1104.4 1-yr ARM $1060.23 Dec 31 30-yr $1085.89 15-yr $1563.93 5-yr ARM $1144.37 1-yr ARM $1055.38 Oct 30th 30-yr $1258.87 15-yr $1708.31 5-yr ARM $1245.77 1-yr ARM $1120.56 So if we look at what mortgage payments would be today compared to October 30th is fairly apparent that rates and correspondingly mortgage payments have plummeted. For a 30 year mortgage on a 200k loan the payment has come down from $1258.87 to $1068.75. That is a drop of $190.12 or 15.1%. That is a pretty huge drop in a few months. So what is going to happen moving forward. Rates can obviously not continue to go down week after week. At this point I think there is a bigger risk of rates going up than going down. I would be surprised if rates continue to go down for 3 or 4 more weeks. In the next few months I would expect rates to continue to hover around 5 percent plus or minus half a point. Basically the government is going to do whatever possible to keep rates low. In the next two or three years its expected interest rates will rise dramatically. All the money that has been pushed into the economy will at some point increase inflation and this will in turn push up mortgage rates. |
About the Author
Ki writes regularly about mortgage rates and the mortgage industry. His site has a search of the Austin MLS
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