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February 21st, 2011

Mortgage rates end month-long rise

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int rate QMarkMortgage rates took a break from their month-long increase which brought rates to levels unseen since May 2010:

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.

Click here to continue reading “Steady Mortgage Rates.”

HSH.com’s free Market Trends Newsletter, an in-depth analysis of various financial markets from the week prior, is published every Monday. Email subscribers receive it in their inbox Friday night, so sign up today!

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One Response to “Mortgage rates end month-long rise”

  1. Tweets that mention Mortgage rates end month-long rise | HSH Financial News Blog -- Topsy.com Says: February 21st, 2011 at 2:06 pm

    [...] This post was mentioned on Twitter by Tim Barnhill, Roberto Mazzoni. Roberto Mazzoni said: Mortgage rates end month-long rise: Mortgage rates took a break from their month-long increase which brought rat… http://bit.ly/fy5mai [...]

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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