Mortgage Interest Rates Nudge Down a Little

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Before we talk about what happened with mortgage rates this week lets do a quick recap of what happened last week. Last week mortgage interest rates made a sudden jump over the previous week.

For the entire month of June and July 30 year mortgage interest rates only fluctuated from 6.09 to 6.45. Then last week 30 year mortgage rates suddenly jumped from 6.26 to 6.63. At the time we predicted that rates would probably fall this week because usually after big spikes in mortgage rates there is a bit of a correction. We saw exactly that with all four of the major mortgage products falling, but not back to their levels from two weeks ago. 30 Year rates fell from 6.63 to 6.52. The only mortgage product to not fall substantially this week was the 1 Year ARM. Last week the 1 Year rate rose from 5.10 to 5.49. This week the 1 Year mortgage rate lost most of that gain falling to 5.27.

Below are rates for the major mortgage products for the last month.

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

July 3, 2008

30-yr 6.35 15-yr 5.92 5-yr ARM 5.78 1-yr ARM 5.17

OK so mortgage interest rates tell part of the story. But how does this translate into a mortgage payment. Using our free mortgage calculator lets translate the mortgage interest rates over the last few weeks into a mortgage payment for a 200k loan.

July 31th, 2008

30-yr $1266.76

15-yr $1695.28

5-yr ARM $1208.11

1-yr ARM $1106.88

July 24th, 2008

30-yr $1281.28

15-yr $1707.22

5-yr ARM $1219.75

1-yr ARM $1134.32

July 17th, 2008

30-yr $1232.73

15-yr $1664.03

5-yr ARM $1173.5

1-yr ARM $1085.89

So it looks like for now rates are still relatively high. The only mortgage product that remains relatively low is the 1 year mortgage rate. Comparing it to the 30 Year mortgage rate at 6.52 the 1 Year mortgage rate comes in at 5.27. For a 200k mortgage the mortgage payment with a 30 Year loan would be 1266.76. For a 1 Year Arm the mortgage payment would be 1106.88 or about 12.6% less. While I usually avoid Arm’s that is a pretty substantial different.

The only problem with 1 Year Arm’s is that their is no guarantee mortgage rates will be less in one year. And with all the volatility in the mortgage markets right now they could be somewhat higher. Looking forward its hard to tell what mortgage rates are going to do over the next month. The FED’s refusal to lower rates would tend to push mortgage interest rates up but since mortgage rates rose so much over the last two weeks we can only hope that for the time being banks are satisfied with the current rates.

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