All good things must come to an end. After 12 weeks of falling rates interest rates went up this week. The 30 year rate went back above 5 jumping from 4.96 to 5.12. Below are rates from the last few weeks and October 30 which was when rates first started to fall.
Jan 22, 2008
30-yr 5.12 15-yr 4.80 5-yr ARM 5.24 1-yr ARM 4.92
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
October 30, 2008
30-yr 6.46 15-yr 6.19 5-yr ARM 6.36 1-yr ARM 5.38
Basically 30 year rates dropped back to what we saw at the end of December. Looking at the other major mortgage products, the 5 and 1 year Arms are still pretty much irrelevant. The 5 year Arm is above the 30 year mortgage rate and the 1 year arm is not much lower than the 30 year mortgage rate so both of them are pretty much dead. The 15 year rate on the other hand is still a viable option. This week the 15 year mortgage rose from 4.65 to 4.80. Still the 30 year mortgage rate is by far the most popular mortgage product over the last few months.
Although rates have risen recently we still don't want to lose the fact that rates are still historically low. In fact if we ignore the last 3 weeks today's rates are still at 40 year lows. Moving on lets look at mortgage payments. Taking today's rates we used our mortgage calculator and determined what the mortgage payment would be on a 200k loan. We also determined mortgage payments based on rates from two weeks ago and from one month ago. We also translated rates from October 16th into a mortgage payment.
Jan 22, 2008
30-yr 1088.35
15-yr 1560.82
5-yr ARM 1103.16
1-yr ARM 1063.88
Jan 8th
30-yr $1074.86
15-yr $1542.28
5-yr ARM $1134.32
1-yr ARM $1067.53
Dec 24
30-yr 1090.82
15-yr 1572.22
5-yr ARM 1134.32
1-yr ARM 1067.53
October 16th
30-yr $1258.87
15-yr $1702.87
5-yr ARM $1217.16
1-yr ARM $1093.28
So basically what we see is that we are not seeing too much movement over the last month. But the saving compared to a few months ago is pretty substantial. For a 200k loan, compared to payment one would have from the rates on October 16th the mortgage today would be 16% less or $170.52 less.
So what are we going to see moving forward? It looks like rates are going to move up in the short term but I don't think they will go above 6 for the next month or two. Long term through the general expectation is that rates are going to rise perhaps as high as 15%. This is basically the fallout from the Fed pushing billions into the economy.
Author Resource:-
Ki owns a full service real estate user in Austin, Texas. He developed and maintains a website on the Austin real estate market. He also provides free mortgage calculator code and a widget that has mortgage rates for website that webmasters can use.
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