Mortgage interest rates were virtually unchanged this week. The 30 Year rate stayed even at 6.52. The 15 year rate moved up a microscopic from 6.07 to 6.10 and the 5 year arm moved down from 6.07 to 6.05. The only rate that moved much was the one year are which fell from 5.27 to 5.22. The one year Arm had the biggest fall last week as well. So in total for the last two weeks the 1 year arm has fallen from 5.49 to 5.22 while the other 3 major mortgage products have not fallen more than .11. Why the one year Arm is looking so good is someone else question. A high percent of the foreclosures the country is currently dealing with are from Arm based mortgages. So it seems odd to encourage Arms when they are partially responsible with the current mess we are in. Of course the population in payment of the assorted mortgage fellowships didn't lose billions in shareholder wealth in just two years by development thrifty decisions. So who knows what their current strategy is. Here are mortgage interest rates for the major mortgage products for the last few weeks.
August 7,2008
30-yr 6.52 15-yr 6.10 5-yr Arm 6.05 1-yr Arm 5.22
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July 31,2008
30-yr 6.52 15-yr 6.07 5-yr Arm 6.07 1-yr Arm 5.27
July 24,2008
30-yr 6.63 15-yr 6.18 5-yr Arm 6.16 1-yr Arm 5.49
July 17,2008
30-yr 6.26 15-yr 5.78 5-yr Arm 5.80 1-yr Arm 5.10
July 10,2008
30-yr 6.37 15-yr 5.91 5-yr Arm 5.82 1-yr Arm 5.17
As all the time what do all these crazy numbers mean. To put these numbers in perspective lets see what these rates translate into for a mortgage on a 200k house.
August 7th
30-yr 66.76
15-yr 98.53
5-yr Arm 05.53
1-yr Arm 00.69
July 31th
30-yr 66.76
15-yr 95.28
5-yr Arm 08.11
1-yr Arm 06.88
July 24th
30-yr 81.28
15-yr 07.22
5-yr Arm 19.75
1-yr Arm 34.32
On the one hand I am commonly pretty against Arms. But a discrepancy of 166.07 a month is pretty hard to ignore. If you are reasoning of getting a 1 Year Arm this my advice. 1) Make sure you have 12 months of mortgage payments in a liquid account. 2) Watch the rates over the next year and wait for rates to come down a bit. If they don't come down and instead come up make sure you can afford to refinance at a higher rate. 3) this should be certain from point one and two but if you are getting a 1 Year Arm don't get everywhere near your maximum loan amount. So if you are stylish for a 300k loan it might be ok to get a 1 Year Arm if you are buying a house that is 150k-200k. If you are stylish for a 300k loan and get a house for 280k get a 30 Year loan its simply not worth the risk. With an Arm your mortgage rate will simply start to fluctuate after a year unlike a balloon where you are forced to refinance.
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