30 Year Mortgage Rates dropped from 5.15 to 5.03. With the exception of the weeks of January 8th, 2009 and January 15th 2009 this is the lowest rates have been in over 40 years. The other 3 major mortgage products dropped as well with 15 year arms moving down from 4.72 to 4.64, 5 year arms going from 5.08 to 4.99 and 1 year arms moving from 4.86 to 4.80. Although the 5 year arm has moved below the 30 year fixed for the last few weeks there is still no real reason to get a 5 year arm at 4.99 when you can lock in for 30 years at 5.03 at historically low rates. Below are mortgage rates for the four major products for the last few weeks.
Mar 12, 2009
30-yr 5.03 15-yr 4.64 5-yr ARM 4.99 1-yr ARM 4.80
Mar 05, 2009
30-yr 5.15 15-yr 4.72 5-yr ARM 5.08 1-yr ARM 4.86
Feb 26, 2009
30-yr 5.07 15-yr 4.68 5-yr ARM 5.06 1-yr ARM 4.81
Feb 19, 2009
30-yr 5.04 15-yr 4.68 5-yr ARM 5.04 1-yr ARM 4.80
Feb 12, 2009
30-yr 5.16 15-yr 4.81 5-yr ARM 5.23 1-yr ARM 4.94
So we also wanted to look at mortgage payments. We took today's rates and translated them into the payment on a 200k loan. We also translated the rates from January 15th, which was the lowest rates we have seen, and from October 16th which is the highest rates we have seen in the last few months.
Mar 12
30-yr 1077.31
15-yr 1544.33
5-yr ARM 1072.42
1-yr ARM 1049.33
Jan 15
30-yr $1068.75
15-yr $1545.36
5-yr ARM $1104.4
1-yr ARM $1060.23
Oct 16
30-yr $1258.87
15-yr $1702.87
5-yr ARM $1217.16
1-yr ARM $1093.28
Looking above its obvious anyway getting a loan today didn't lose out all that much by not catching rates at their absolute lows on January 15th. Payments for a 200k 30 year mortgage today are less than $10 dollar more a month. But their are substantial savings compared to what we saw a few months ago. Payments would be $181.56 less today compared to getting a 200k loan on October 16th.
That relates to our next point of where mortgage rates are going. I can't say for certain what they are going to do over the next 2 months. I would guess as long as the economy stays weak they are not going to move around too much. Mostly likely they will hover between 4.5 and 5.5. Basically they can't fall too much considering they are already abnormally low. And as long as the economy stays down I don't see them rising too much.
But once the economy recovers most people expect that rates will rise. Some have speculated that rates could jump up to 12-15 percent. Basically so much money has been poured into the economy during the recession to stop things from getting worse. Normally that would cause inflation. But the weak economy has kept inflation in check. When the economy finally does recover the billions poured into the financial system by the government will lead to high inflation which will in turn lead to high mortgage rates.
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