For the second week in a row 30 year mortgage rates held steady at 6.52. 15 year mortgages last week moved from 6.07 to 6.1. The week they returned to 6.07. So basically the fixed rates are holding steady. 5 Year Arms fell from 6.05 to 6.02 and 1 Year Arms fell from 5.22 to 5.18. So they didn't move that much. But what is interesting is the overall trend. This week marks the 3rd week in a row that both 5 and 1 year arms have fallen. The 1 year arm has fallen from 5.49 to 5.18. This continues an overall trend of the difference between 30 Year Fixed mortgages and 1 Year growing. On May 1st 30 Year Arms were at 6.06 and 1 Year Arms were at 5.29. Mortgage rates since then have risen up to 6.52 while 1 Year arms have fallen to 5.18. The question of course is why banks are making arms (the mortgage product that is partly responsible for the high rate of foreclosures) more attractive. And I don't have an answer on that. Below are the mortgage rates for the last few weeks.
30-yr 6.52 15-yr 6.07 5-yr ARM 6.02 1-yr ARM 5.18
30-yr 6.52 15-yr 6.1 5-yr ARM 6.05 1-yr ARM 5.22
30-yr 6.52 15-yr 6.07 5-yr ARM 6.07 1-yr ARM 5.27
30-yr 6.63 15-yr 6.18 5-yr ARM 6.16 1-yr ARM 5.49
30-yr 6.26 15-yr 5.78 5-yr ARM 5.80 1-yr ARM 5.10
As always I like to translate the mortgage rates into an actual mortgage payment. So using our free mortgage calculator below are what today's rates would translate into for a 200k mortgage. I also run the numbers based on what mortgage rates were at on May 1st.
5-yr ARM $1201.67
1-yr ARM $1095.75
May 1st, 2008
5-yr ARM $1164.60
1-yr ARM $1085.89
On the one hand in general I am against arms. They are generally dangerous so I don't like to recommend them. But with such a wide gap between arms and traditional mortgages they are hard to ignore. If you do get an arm I would be prepared for your mortgage to jump substantially. For the most part I would consider an arm if you had enough money in savings to pay off the property if rates jumped up dramatically over the year.
The other factor to consider when getting a mortgage is credit scores. While for the first half of 2007 all one had to do to get a mortgage was show up at a bank over the last years banks have gotten a lot tighter. Additionally, interest rates now more than ever are tied to ones credit score. So if you are planning on buying a house sometime in the near future its a good idea to figure out what your credit score is now to make sure there are no outstanding debts or problems you need to fix.
Escapeso Realty provides current information on mortgage interest rates on their site. They also provide a free mortgage calculator