Mortgage Rates Continue To Rise

Mortgage rates jumped up again this week with the 30 year rate moving from 5.05 to 5.14

. In the last month mortgage rates have risen rapidly moving from 4.71 on December 3rd to 5.14 today. The other major mortgage products have risen over the same time period but not as substantially as the 30 year rate. Below are rates from the weeks from Dec 03, 2009 to Dec 31, 2009 and rates from July 2, 2009.

Dec 31, 2009

30-fixed 5.14 15-fixed 4.54 5-yr ARM 4.44 1-yr ARM 4.33

Dec 24, 2009

30-fixed 5.05 15-fixed 4.45 5-yr ARM 4.40 1-yr ARM 4.38

Dec 17, 2009

30-fixed 4.94 15-fixed 4.38 5-yr ARM 4.37 1-yr ARM 4.34

Dec 10, 2009

30-fixed 4.81 15-fixed 4.32 5-yr ARM 4.26 1-yr ARM 4.24

Dec 03, 2009

30-fixed 4.71 15-fixed 4.27 5-yr ARM 4.18 1-yr ARM 4.25

Since December 3rd the 15 year rate has risen from 4.27 to 4.54. The arms have seen the least movement with the 5 year arm rising from 4.19 to 4.44 and the 1 year arm rising from 4.25 to 4.33.

So does it still make sense for potential buyers to get a 30 year fixed mortgage. While the choice is not as obvious as it was a few months ago I would still favor the 30 year fixed mortgage over arms. Basically although 30 year rates have risen they are still close to historic lows. In addition, the general expectation is that rates are going to rise over the next year. The only time I think it makes sense to look at an arm is if someone is pretty confident they are going to move in the next 5 years. Even if someone plans on moving in a year I would still probably get a 5 year arm over a 1 year arm. Rates are expected to be much higher in a year and even if someone puts a house on the market in a year it could take much longer to sell.

So rates are one thing but what really matters of course is mortgage payments. So beyond mortgage rates lets look at actual mortgage payments. We took today's rates and translated them into payments on a 200k loan. We also did the same thing with rates from December 3, 2009 (the all time low) and rates from July 2, 2009 (6 months ago).

Dec 31

30-year $1090.82

15-year $1534.07

5-year ARM $1006.25

1-year ARM $993.26

Dec 03

30-yr $1038.47

15-yr $1506.58

5 ARM $975.7

1 ARM $983.87

Jul 02

30-year $1113.09

15-year $1557.72

5-year ARM $1059.02

1-year ARM $1066.32

So compared to 4 weeks ago a payment on a 200k loan is 52.35 more a month for an increase of 5.04 percent. So what is going to happen moving forward? After such a quick rise I would not be surprised to see rates pull back a little bit in the next week or two. Long term though the general expectation is that rates are going to be higher than what we are seeing today. So while some buyers may regret missing the low rates we saw a few weeks ago they might regret it more if rates move substantially higher in the next two months.

by: Ki Gray

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