Mortgage Rates spiked up this week. The 30 year rate jumped from 4.91 to 5.29. This is the highest we have seen mortgage rates all year. Last week mortgage rates moved from 4.82 to 4.91 last week. What is interesting is that in two weeks mortgage rates have moved from near all time lows (the all time low was 4.78) to the highest point of the year. The 15 year rate moved up from 4.53 to 4.79. We did not see as much movement in the arms. The 5 year arm rose from 4.82 to 4.85 and the 1 year arm moved from 4.69 to 4.81.
Two weeks ago 30 year rates and 1 and 5 year arms were all hovering around 4.8 making the arms somewhat pointless. There is no reason to get an ARM when one can get a 30 year fixed mortgage for the same rate. With the sudden rise in the 30 year rate the arms have become relevant again. I still think the 30 year mortgage product is preferable over the arms even at current rates. Although 30 year mortgage rates have risen the expectation is that they will continue to rise for the rest of the year. Below are rates for the last few weeks as well as from 6 months ago.
Jun 04, 2009
30-yr 5.29 15-yr 4.79 5-yr ARM 4.85 1-yr ARM 4.81
May 28, 2009
30-yr 4.91 15-yr 4.53 5-yr ARM 4.82 1-yr ARM 4.69
May 21, 2009
30-yr 4.82 15-yr 4.50 5-yr ARM 4.79 1-yr ARM 4.82
May 14, 2009
30-yr 4.86 15-yr 4.52 5-yr ARM 4.82 1-yr ARM 4.71
May 07, 2009
30-yr 4.84 15-yr 4.51 5-yr ARM 4.90 1-yr ARM 4.78
Dec 04, 2008
30-yr 5.53 15-yr 5.33 5-yr ARM 5.77 1-yr ARM 5.02
In addition to mortgage rates we also like to look at mortgage payments. Using our mortgage calculator we translated today's mortgage rates into a monthly payment on a 200k loan. We did the same thing with rates from last week and rates from December 4, 2008 (6 months ago).
Jun 04
30-yr $1109.36
15-yr $1559.79
5-yr ARM $1055.38
1-yr ARM $1050.53
May 28
30-yr $1062.66
15-yr $1533.05
5-yr ARM $1051.74
1-yr ARM $1036.07
Dec 04
30-yr $1139.34
15-yr $1616.18
5-yr ARM $1169.68
1-yr ARM $1076.08
Usually there is not too much difference from week to week. That is not true this week. The payment on a 200k loan has risen 46.7 or about 4.4 percent. Payments are down 2.63 percent from what they would have been 6 months ago.
So what is our advice to people looking for a home? Unfortunately I think mortgage rates will continue to rise so it's probably best to lock in rates now. Second although arms are a viable option I would still take the 30 year rate over the 1 or 5 year arm. There are some expectations this recent rise is just the tip of the iceberg and we could see rates above 12 percent before this is over with.
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Ki maintains a website about
Austin Texas. His site also provides information on
mortgage rates along with a
free mortgage calculator.
