Mortgage rates end month-long riseby Tim Manni
Upward pressure for mortgage interest rates has been quite evident in the market over the past month as the average 30-year fixed-rate mortgage moved back to levels last seen back in May 2010. For [last] week at least, rates seem to have found a resting place from their upward climb.
Last week’s average for several 30-year fixed products fell by just one basis point:
HSH.com’s overall mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — noted that the overall average rate for 30-year fixed-rate mortgages slipped by a single basis point, gently declining to an average 5.32%. Thirty-year fixed rate mortgages eligible for FHA backing, a key component of the first-time homebuyer market saw their average rate decrease to 4.95% for the week. Hybrid 5/1 ARMs, perhaps the most viable alternative to the traditional 30-year FRM rose by two basis points (0.02%) to close the period at 4.01%.
If you’re in the market for a loan product, and five-plus percent interest rates seem to high, perhaps you should consider a 5/1 ARM:
Over a five-year period, a borrower with a $200,000 loan who chose a 5/1 product would save $12,978 in interest cost while retiring about $3,551 more of the outstanding balance of the loan compared to the 30-year FRMI. Of course, if market conditions should turn unfavorable at the end of the fixed-rate period, a borrower might give all that back (if not more) over time.
With a mortgage market still in a state of flux, with many changes either just underway or slated for the future, one thing is for sure, they are all expected to affect the price and the availability of home loans moving forward. To what degree? We’ll just to wait and see.
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