Mortgage Rates Hit A New All Time Low (for The Fourth Time This Month)

The 30 year rate fell from 4.49 to 4.44 this week

. This is the 4th week in a row where rates have fallen. What's interesting is not only is 4.44 an all time low. But we have been hitting new all time lows for the last 4 weeks in a row. What is even more interesting is no one cares. The market is hardly reacting to bizarrely low interest rates. It's also gotten very little play in the press which might be a contributing factor.

The 15 year dropped from 3.95 to 3.92. The 5 and 1 year arms dropped from 3.63 to 3.56 (5 year arm) and 3.55 to 3.53 (1 year arm). These are all new all time low rates as well. Below are rates from the weeks from Jul 15, 2010 to Aug 12, 2010

Aug 12, 2010

30-fixed 4.44 15-fixed 3.92 5 ARM 3.56 1 ARM 3.53

Aug 05, 2010

30-fixed 4.49 15-fixed 3.95 5 ARM 3.63 1 ARM 3.55

Jul 29, 2010

30-fixed 4.54 15-fixed 4.00 5 ARM 3.76 1 ARM 3.64

Jul 22, 2010

30-fixed 4.56 15-fixed 4.03 5 ARM 3.79 1 ARM 3.70

Jul 15, 2010

30-fixed 4.57 15-fixed 4.06 5 ARM 3.85 1 ARM 3.74

Jan 28, 2010

30-fixed 4.98 15-fixed 4.39 5 ARM 4.25 1 ARM 4.29

So mortgage rates are one thing but what really matters is mortgage payments so lets look at that. We took today's rates and translated them into a mortgage for a 200k house. We did the same thing with rates from July, 29 2010 and rates from January, 28 2010.

Aug 12

30-year $1006.25

15-year $1471.37

5-year ARM $904.8

1-year ARM $901.44

Jul 29

30-year $1018.12

15-year $1479.37

5-year ARM $927.36

1-year ARM $913.79

Jan 28

30-year $1071.19

15-year $1518.76

5-year ARM $983.87

1-year ARM $988.56

For a 200k loan the monthly payment is slightly above a thousand dollars at $1006.25. Which is similar to the "low low rates" that we saw on balloons which got the country into the mess we are currently into. Of course the current mortgages don't have sudden balloons or repayment penalties. The trick now is that the mortgages are much tougher to qualify for. Compared to 6 months ago a mortgage payment today on a 200k loan is $64.94 less a month for a drop of 6.06 percent.

So what is going to happen moving forward? It's hard to tell in the short term. The federal government is intent on keeping rates as low as possible as long as people are concerned about a double dip recession. Over the next few weeks I would be surprised to see rates rise. After that there are two possibilities. If we move into a double dip recession I would expect rates to stay at current levels. If the economy recovers its likely rates will increase perhaps drastically.

by: Ki Gray

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