Mortgage Rates Hold Steady   

                                    by dane

 

For the most part mortgage rates held steady this week after dropping sharply last week. The 30 year rate rose slightly from 5.12 to 5.14 after dropping from 5.29 the week before. The 15 year rate rose from 4.56 to 4.58. The 1 year arm held steady at 4.69 and the 5 year rate (the only mortgage product that saw much movement) rose from 4.57 to 4.67. 

The general consensus is still that rates are going to eventual move up rapidly when the economy recovers. As long as the economy stay in the doldrums there is a decent chance rates will stay below 5.5. To put today's rates in historical context the all time low for the 30 year rate is 4.81 (reached in April 2009). So the 30 year rate is still very close to its all time low. Below are mortgage rates for the major mortgage products for the last few weeks and from January 22 (6 months ago).

Aug 27, 2009 30-yr 5.14 15-yr 4.58 5-yr ARM 4.67 1-yr ARM 4.69
Aug 20, 2009 30-yr 5.12 15-yr 4.56 5-yr ARM 4.57 1-yr ARM 4.69
Aug 13, 2009 30-yr 5.29 15-yr 4.68 5-yr ARM 4.75 1-yr ARM 4.72
Aug 06, 2009 30-yr 5.22 15-yr 4.63 5-yr ARM 4.73 1-yr ARM 4.78
Jul 30, 2009 30-yr 5.25 15-yr 4.69 5-yr ARM 4.75 1-yr ARM 4.80
Jan 22, 2009 30-yr 5.04 15-yr 5.12 5-yr ARM 4.80 1-yr ARM 5.24

For the most part mortgage rates have stayed low in spite of some encouraging signs with the economy. In addition to rates we can also look at mortgage payments. We took today's rates and translated them into a mortgage payment for a 200k loan. We also translated rates from August 13th (2 weeks ago) and January 22 (6 months ago) into a mortgage for a 200k loan.

Aug 27 30-yr $1090.82 15-yr $1538.17 5-yr ARM $1033.67 1-yr ARM $1036.07
Aug 13 30-yr $1109.36 15-yr $1548.44 5-yr ARM $1043.29 1-yr ARM $1039.68
Jan 22 30-yr $1078.53 15-yr $1594.11 5-yr ARM $1049.33 1-yr ARM $1103.16

As we saw with mortgage rates the mortgage payments are relatively stable from 2 weeks ago.
So what do we expect over the next few months? As long as the economy stays down barring other developments in the financial sector mortgage rates should stay low. When the economy starts to rebound though mortgage rates are generally expected to start rising.

What is our advice to people considering getting a loan? Basically it's the same as it has been for the last few months. I would avoid getting a 5 or 1 year arm if at all possible. Since rates should be higher in the future it makes sense to lock into long term rates while they are low. It's also a good idea to start the loan process before starting your home search. We are still in one of the strictest lending environments we have seen in decades. Minor credit issues that were ignored before are stopping loans from going through today. Starting the loan process early on can give a potential borrower time to clear up any issues on their credit report.

About the Author

Ki has a comprehensive website focusing on Austin Tx real estate. Buyers can use it to search the Austin MLS. It also provides a graph showing updated mortgage interest rates.