After breaking through 5% and surging to 5.20% last week the 30-year average mortgage rate declined slightly to 5.19% according to BestCashCo
w/Informa data. The successful auction of 10 year Treasury notes last week reassured the market and stopped any further climb in rates. Most analysts expect rates to rise to the 5.50-6% range over the next six months but if Treasury auctions continue to run strong, then rates could linger below 5.5% for some time.
What Does This Mean for Homebuyers?
I've been following actual rates, not just averages for a 30-year fixed rate loan in Massachusetts for the past four months. Until two weeks ago, a homebuyer could get a $200,000 loan at 0 points for 4.5%. Last week, the rate shot up to 5.125%. This week is came down to 4.875%.
Other Mortgage Rates
Other rates moved up slightly. The average 15-year fixed rate mortgage rose from 4.50% to 4.52%, up from a low of 4.34% in March. As the chart shows, the 5-year ARM rose from 4.03% to 4.05%. The 5-year ARM has shown much less volatility than the longer-term fixed rate mortgages. The 1-year ARM, one of the most volatile of the rates tracked moved from 4.83% to 4.86%
If you have been hesitating on buying your first house until the mortgage rates went lower, you missed your chance. It's probably better to get in now before they go up much higher!
It seems as though the honeymoon with low mortgage rates is over. Those rates have been on the steady increase in recent weeks and this past week is no exception. Here are the latest rates in an easy-to-read format for your perusal.
• The rates on a 30-year fixed mortgage went up to 5.31 percent in the past week. Just a few months ago in December of 2009, the rate for the same type of mortgage was at a record low of 4.71 percent. That’s more than a half point increase in just four months.
• The average for a 30-year fixed rate mortgage, however, is a bit lower. The average stands at 5.17 percent which is just a bit higher than last week’s average of 5.16 percent.
• For a 15-year fixed rate mortgage, the rates have gone up by a tenth of a point in the past week. Currently, those mortgage rates are 4.50 percent whereas a week ago the rates stood at 4.40 percent.
• The average for adjustable rate mortgages has increased about .04 percent over last year’s rates. Currently, a one-year conforming adjustable rate mortgage is at 4.67 percent while the average three-year conforming ARM is 4.61 percent. That number is down from last week’s 4.66 percent, but it is an increase over last year’s rates.
• As far as home equity rates are concerned, those numbers have increased as well. For a 10-year home equity loan, you can expect an average rate of about 7.440 percent. Last week’s average for the same loan was about 7.281 percent. The 15-year home equity rates currently average about 7.260 percent, which is slightly up from last week’s 7.557 average.
If you have been counting on getting in on the housing market while mortgage rates were low, you should probably make a move right now. With the first-time homebuyer’s tax credit expiring and the feds removing their support of the mortgage industry, mortgage rates aren’t going to go anywhere but up. Take advantage of the current rates before they go much higher!
After months of remaining near 5%, mortgage rates have shot up over the past two weeks and are now at 5.20% according to BestCashCow/Informa data.
After months of remaining near 5%, mortgage rates have shot up over the past two weeks and are now at 5.20% according to BestCashCow/Informa data.
A perfect storm has come together to increase mortgage rates. Ten year Treasury notes, which help set fixed rate mortgages, rose above 4% for the first time in 18 months. At the same time, the Federal Reserve has ended its purchase of mortgage backed securities, taking an aggressive buyer out of the market.
We've speculated for some time about what would happen when the Fed program ends and we are now seeing some of the results. Most analysts expected a modest and gradual 25-50 basis point jump in rates once the progam ended. We've now seen a 25 basis point jump in the past two weeks.
What Does This Mean for Homebuyers?
If these trends hold, then it means that refinancing activity will slow. It will also put pressure on a real estate market that is slowly recovering.
I've been following actual rates, not just averages for a 30-year fixed rate loan in Massachusetts for the past four months. Until two weeks ago, a homebuyer could get a $200,000 loan at 0 points for 4.5%. That rate has now shot up to 5.125%.
Here's what the jump in rates means to your payments:
30 Year Mortgage:
Interest Rate 4.5%; monthly payment: $1,01.37
Interest Rate 5.125%; monthly payment: $1,088.97
The homebuyer in this example will now be paying an extra $87 per month because of the rise in rates.
Other Mortgage Rates
Other rates also moved up. The average 15-year fixed rate mortgage rose from 4.40% to 4.50%. The 5-year ARM rose from 3.99% to 4.03% and the ever volatile 1-year ARM moved from 4.64% to 4.83%.
When choosing what type of home you want to buy, there are several things to consider. One of the most important decisions you will have to make is if you want a newly-built home or an existing pre-owned home. Here are some pros and cons of each to help you make your decision.
When you decide to buy a home before the mortgage rates shoot up to high, one of the main decisions you will need to consider is if you want to purchase a new construction home or a resale home. This can be one of the most essential decisions you will need to make because it can help make you more comfortable with your choice. In order to make an informed decision, knowing the difference between the two types of homes will help you find the one that is right for you.
New Homes Have Modern Safety Features
When you decide to purchase a newly-constructed home, you can expect to find some of the most updated safety features within that home. When there are more safety features, there tends to be fewer hazards and this creates a better overall atmosphere for the entire family.
Existing Homes Often Have More Property
These days, it’s difficult to find a newly-constructed home with a huge backyard or any significant property. This is because today’s homes are typically built closer together. However, with older existing homes, you can usually find a larger yard for the kids or pets to roam around.
Resale Homes are Often Less Expensive
Many of the pre-owned homes that are on the market today have a lower price than the new construction homes. One of the reasons is because they don’t have the modern features that today’s new construction homes have. Also, depending on the state you live in, resale homes may also have less expensive property taxes.
Newly-Constructed Homes are More Efficient
Energy-efficiency is one of the things that today’s home builder has in mind when construction new homes. Today’s appliance manufacturers and window manufacturers make their products to save the consumer on electric and heating bills. With better windows, the new homes are better insulated, too.
Resale Homes have More Traditional Styles
Newly-constructed homes typically do not have the traditional feel that older homes have. You may be missing out on a formal dining room and other special features that are typical of homes from yesteryear.
Existing Homes have More Negotiable Prices
It is generally less difficult to negotiate a price on an existing home because the newly-constructed homes are in higher demand. In many cases, the builder is also involved in the negotiations with a new home so it is difficult to bring the price down too far. This means that you could possibly get more home for your buck by choosing to go with a resale home over a new construction.
As part of the interview with Senior Loan Officer Jim O' Malley, we asked him about Jumbo mortgages. In some states like Massachusetts, the jumbo level begins at $523,750. Over that limit, it becomes much harder to get a loan. You must have at least 25% down, 6 months of reserves, and a FICO score over 720.
As part of the interview with Senior Loan Officer Jim O' Malley, we asked him about Jumbo mortgages. In some states like Massachusetts, the jumbo level begins at $523,750. Over that limit, it becomes much harder to get a loan. You must have at least 25% down, 6 months of reserves, and a FICO score over 720.
This may vary by state so be sure to look up your state's conforming loan level.
Mortgage rates are on the rise. How far do you think they will go up?
It looks like the time for mortgage rates below five percent are over…at least for the time being According to recent reports, the average rate for a 30-year fixed rate mortgage jumped up to 5.08%. In a twist in the industry, however, the rates for adjustable loans decreased over the past week.
The average for a 30-year fixed-rate mortgage last week was about 4.99%. The rates have stayed fairly steady for several months, though, as the average rate for a 30-year fixed mortgage at this time last year was about 4.78%. The rates for a 15-year fixed rate mortgage at the end of last week were about 4.39%, which is an increase of about .05% from the week before. However, those numbers are lower than the ones from a year ago. Last year at this time, the average rates for a 15-year fixed mortgage were 4.52%.
According to analysts in the mortgage field, the upward swing in mortgage rates is likely to continue for the rest of the year. By the end of 2010, some expect the mortgage rates to be as high as six percent. Part of the reason for the increase is due to the fact that the Federal Reserve has planned on ceasing their purchases of mortgage-related securities. The Feds stopped doing that at the end of last month but they have been talking about doing it for months.
Increasing interest rates are not good for the overall housing market. Everybody knows how vulnerable that industry is right now and the government’s pullout of support is going to make the mortgage industry even less stable than it already is. What makes the situation even worse is that we are entering into the spring months, which is the industry’s most vital period for selling homes. It looked as though we were on our way to a recovery in the last few months of 2009 with a resurgence in home sales, but those numbers began to drop off at the beginning of the year and the rising mortgage rates are only going to make those number fall even further.
On the bright side, however, there has been a glimmer of hope in the mortgage industry. There has been an increase in demand for home purchase loans which is often a signal of home sales in the months to come. According to the Mortgage Bankers Association, the number of mortgage applications in the United States increased for the first time in three weeks to its highest level since late 2009.
So while things are looking bleak on one end of the mortgage industry, there is still a shimmer of hope in another aspect. Only time will tell how the whole situation is going to end up.
Average 30-year fixed mortgage rates rose above 5% last week, moving up 9 basis points from 4.99% to 5.08% according to the Freddie Mac Primary Mortgage Survey. That's the highest rate since December 31, 2009 when rates stood at 5.14%. The BestCashCow mortgage averages showed the same trend with the 30-year moving from 4.95% to 5.04%. This is not the first time that rates have moved above 5% over the last couple of months, as the chart below shows but what is different this time is the end of the Fed's purchase of mortgage backed securities on March 31 as well as a rise in Treasury Bonds. Most analysts expect that rates will move up modestly (by 20-50 basis points) and I explore this a bit in an earlier article entitled: Will Mortgage Rates Rise When the Fed MBS Program Ends?
We'll see what happens to rates over the next couple of weeks as the market begins to digest the lack of the Fed in the mortgage market and a recovering economy.
Averages though won't get you a mortgage and I like to check and see what rate is actually available. Since I live in Massachusetts I checked Massachusetts mortgage rates. Below I compared the best rate I could find on a $200,000 30-year fixed rate mortgage with 0 points:
This Week Last Week
Rate: 5.000% 4.875%
Points: 0 0
Fees: $1,995 $1,995
The best mortgage rate I could find is now 5%, up from 4.875% the week before and 4.725% two weeks ago. Best rates, at least in my area, have now moved up 25 basis points. This is the first significant increase in actual rates that we've seen in the last four months. Rates do seem to be on the rise.
Related Mortgage Video - Key Things to Know About Getting a Mortgage
Other mortgage averages also showed movement. The 15-year FRM only moved from 4.34% to 4.39%, the 5-year ARM dropped from 4.14% to 4.10%. The volatile 1-year Treasury-indexed ARM dropped from 4.20% to 4.05%.
Here's what Freddie Mac had to say about the rate situation:
“Interest rates for fixed mortgages rose this week following a run up in long-term bond yields, while ARM rates eased slightly,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Rates on 30-year fixed loans were the highest since the starting week of this year.
“Home-price declines continue to moderate with more metropolitan areas showing stabilizing or rising values. Compared with one year ago, house prices were down 0.7 percent in January 2010 in the S&P/Case-Shiller® 20-City Composite Index, which was the smallest 12-month decrease since January 2007. Nine of the cities experienced positive growth, led by San Francisco’s 9.1 percent annual gain. Recently, the Mortgage Insurance Companies of America reported that homeowners who moved out of default outnumbered those who became newly delinquent in February, which was the first such occurrence since March 2006.”
Use the BestCashCow rate tables to find the best mortgage rates in your area.
