Austin Texas, Texas
A general blog about real estate with random tips and observations.
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Oct. 4, 2008
In a week of historic changes in the US financial markets mortgage interest rates held pretty much even across the board. With the market making the largest one day drop in decades and also one of the largest one day gains in a long time to mention nothing of the historic 700 billion dollar bailout package we would have expected something to happen with mortgage rates. Instead we saw some of the smallest changes in rates we have seen all year. So what happened? On the one hand I think the markets reacted somewhat positively to the bailout but at the same time the economic outlook has soured. Additionally, the initial positive reaction to the bailout has softened as some have started to question whether the bailout will actually work. So in summary, in a week of unprecedented changes in the mortgage industry mortgage rates didn't move an inch. Below are rates for the main mortgage products for the last few weeks.
October 2, 2008
30-yr 6.10 15-yr 5.78 5-yr ARM 6.00 1-yr ARM 5.12
September 25, 2008
30-yr 6.09 15-yr 5.77 5-yr ARM 6.02 1-yr ARM 5.16
September 18, 2008
30-yr 5.78 15-yr 5.35 5-yr ARM 5.67 1-yr ARM 5.03
September 11, 2008
30-yr 5.93 15-yr 5.54 5-yr ARM 5.87 1-yr ARM 5.21
So let's see what is happening with actual mortgage payments. Using our free mortgage calculatorWe are going to look at mortgage payment for a 200k loan based on today's rates, the rates from last week and the rates from a little over a month ago.
October 2nd
30-yr $1211.98
15-yr $1664.03
5-yr ARM $1199.10
1-yr ARM $1088.35
September 25th
30-yr $1210.69
15-yr $1662.96
5-yr ARM $1201.67
1-yr ARM $1093.28
July 24th
30-yr $1281.28
15-yr $1707.22
5-yr ARM $1219.75
1-yr ARM $1134.32
So obviously nothing happened in the last week. If you got a 30 year mortgage this week instead of last week you are paying $1.29 more a month. But if we look at the payments one would make on the same loan a little over a month ago we can see we would be making substantially lower payments today. For a 200k loan the payment based on rates from July 24th would be $1281.28 compared to $1211.98 based on today's rates. That's comes out to a savings of $69.3 a month or 5.7%. If you did get a loan a month ago it might be worthwhile to call up your mortgage broker and look into refinancing.
So what are mortgage interest rates going to do over the next month? Obviously the Fed and the US Government are doing everything in their power to lower rates. The question is will they be successful. And that is the critical question. One would have thought the prospect of a 700 billion dollar bailout would have moved the stock market up. If we remember the prospect of a Freddie Mac / Fannie Mae bailout moved brought mortgage interest rates down. But instead since the bailout has been proposed the Dow Jones has fallen over 600 points. Not an encouraging sign. So in summary the bailout could encourage confidence among banks and bring rates down but it's not a guarantee.
Ki helps buyers interested in Austin neighborhoods. His site has a search for Austin commercial real estate and updated stats on his Austin real estate blog.
Sep. 20, 2008
If you have been hoping interest rates would drop your prayers have been answered. Interest rates plummeted over half a point last week falling from 6.35 to 5.78. The last time mortgage interest rates fell this fast this quickly was the beginning of 1995 when rates fell from 8.32 to 7.57. Rates have basically fallen following the government takeover of Freddie Mac and Fannie Mae. Below are the rates for the major mortgage products for the last few weeks.
September 18, 2008
30-yr 5.78 15-yr 5.35 5-yr ARM 5.67 1-yr ARM 5.03
September 11, 2008
30-yr 5.93 15-yr 5.54 5-yr ARM 5.87 1-yr ARM 5.21
September 4, 2008
30-yr 6.35 15-yr 5.90 5-yr ARM 5.97 1-yr ARM 5.15
30 Year mortgage rates fell less this week (.15 points) compared to last week (.42 points). 15 year and 5 year arms both fell about .2 points this week. 1 Year arms which was the only major product to not fall last week fell .18 points this week. The other interesting point is that because interest rates were falling before the Fannie Mae and Freddie Mac takeover (based on rumors of the takeover) rates have fallen an incredible amount (.74 points for 30 year rates) over the last month and a half.
Ok so let's see what these drops mean as far as a mortgage payment. Using our mortgage calculator widget lets look at a payment based on a 200k loan. We will run the numbers based on today's mortgage rates and rates on September 11, September 4th and July 24th.
September 18th
30-yr $1170.96
15-yr $1618.29
5-yr ARM $1157
1-yr ARM $1077.31
September 11th
30-yr $1190.11
15-yr $1638.41
5-yr ARM $1182.43
1-yr ARM $1099.45
September 4th
30-yr $1244.47
15-yr $1676.92
5-yr ARM $1195.24
1-yr ARM $1092.05
July 24th
30-yr $1281.28
15-yr $1707.22
5-yr ARM $1219.75
1-yr ARM $1134.32
So the obvious thing to see here is that the now lower interest rates have had a large effect on mortgage payments. A mortgage with a 30 year interest rate dropped from 1281.28 to 1170.96 (9.1 percent) in the last month and a half. So that brings up the point that it's probably a good point to start looking at refinancing your mortgage even if you received a mortgage somewhat recently.
So what is in store for the market in the next few weeks? It's hard to tell but the market is very volatile. One day the stock market drops 400 points because Lehman Brothers goes bankrupt. Then the government proposes to takeover the bad mortgage debt and the market rises. Because of this volatility if you are thinking of refinancing I might lock in to an interest rate now because its hard to know what rates are going to be like in a few weeks.
Ki is a realtor down in Austin Texas. His website provides a search of the Austin MLS along with information on Austin Commercial Real Estate.
Sep. 4, 2008
Mortgage interest rates moved down again this week. This marks the fifth week in a row where 30 Year mortgage rates have either fallen or held steady. This is of course good news for people looking to buy a house. This is also good news for the real estate market. A few weeks ago a weakened real estate market was dealing with additional burden of some of the highest mortgage rates we have seen in a year [ mortgage rates graph]. Below are the mortgage rates for the major mortgage products for the last few months. As we can see while the 30 Year rate has fallen both the 5 year and the 1 year arm have for the most part held steady. This brings the difference between the 30 Year rate and the 5 year and 1 year arm back to roughly normal levels. The 15 year mortgage rate has been falling as well over the last month but not as much as the 30 year rate.
August 28,2008
30-yr 6.40 15-yr 5.93 5-yr ARM 6.03 1-yr ARM 5.33
August 21,2008
30-yr 6.47 15-yr 6.00 5-yr ARM 5.99 1-yr ARM 5.29
August 14,2008
30-yr 6.52 15-yr 6.07 5-yr ARM 6.02 1-yr ARM 5.18
August 7,2008
30-yr 6.52 15-yr 6.10 5-yr ARM 6.05 1-yr ARM 5.22
July 31,2008
30-yr 6.52 15-yr 6.07 5-yr ARM 6.07 1-yr ARM 5.27
While 30 mortgage rates have fallen they are still above what we saw a few months ago when mortgage rates where hovering around 6.0. So while mortgage rates are relatively high I still think this is a pretty good sign. Why? Basically mortgage rates have fallen in spite of the fact that recently the FED has decided not to lower rates. Does this mean that banks are feeling better about handing out mortgages? I would not go that far. If anything I would think that rates rose suddenly a month ago and simply overshot. And now they are simply reacting to that original large increase by moving down a bit. So let's look at what the mortgage rates mean for an actual mortgage. Using our mortgage calculator let's run through the numbers based on a 200k mortgage. We looked at what a mortgage would be this week plus a week and a month ago.
August 28th
30-yr $1251.01
15-yr $1680.15
5-yr ARM $1202.96
1-yr ARM $1114.33
August 21st
30-yr $1260.19
15-yr $1687.71
5-yr ARM $1197.81
1-yr ARM $1109.36
July 24th
30-yr $1281.28
15-yr $1707.22
5-yr ARM $1219.75
1-yr ARM $1134.32
So what is going to happen over the next few months? It's always hard to predict but here is my guess. I think rates will hold steady or fall a bit over the next two months. I am expecting rates to come down a bit after the election. Of course a lot could happen between now and then. If the market runs into more problems I would expect rates to increase. Why? The Fed has their hands tied behind the back they cannot lower the Fed rate too many more times.
Escapeso Austin Real Estate provides information on mortgage rates. They have a graph of historical mortgage rates along with a free mortgage calculator and a mortgage interest rates widget.
Aug. 29, 2008
Mortgage interest rates moved down slightly this week. This was a good sign since it was not preceded by any rate cuts from the FED. The 30 year mortgage rate fell from 6.52 to 6.47 and the 15 year mortgage rate fell from 6.07 to 6.00. For arms the 5 year rate fell from 6.02 to 5.99. The 1 year arm was the only one of the 4 rates to increase going from 5.18 to 5.29. If anything the mortgage rates are not more in align with each other. Over the past few weeks the difference between the 1 year arm and the other rates has seemed larger than normal.
To put this weeks changes in context of what has happened over this summer mortgage rates are still quite a bit higher than earlier. For the 30 Year mortgage on May 22 rates fell to 5.98. Then by July 24 rates raised to 6.63. So rates have fallen since then but we are still quite a bit higher than the rates we saw in May. Below are mortgage rates for the last few weeks.
August 21,2008
30-yr 6.47 15-yr 6.00 5-yr ARM 5.99 1-yr ARM 5.29
August 14,2008
30-yr 6.52 15-yr 6.07 5-yr ARM 6.02 1-yr ARM 5.18
August 7,2008
30-yr 6.52 15-yr 6.1 5-yr ARM 6.05 1-yr ARM 5.22
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
So let's see what these mortgage rates would mean for an actual mortgage payment. We ran today's mortgage rates through our free mortgage calculator for a 200k loan. We also looked at what the payments would have been on the same mortgage a week and a month ago.
August 21st
30-yr $1260.19
15-yr $1687.71
5-yr ARM $1197.81
1-yr ARM $1109.36
August 14th
30-yr $1266.76
15-yr $1695.28
5-yr ARM $1201.67
1-yr ARM $1095.75
July 24th
30-yr $1281.28
15-yr $1707.22
5-yr ARM $1219.75
1-yr ARM $1134.32
So what else is going on in the mortgage industry. First it looks like the government might take over Freddie Mac and Fannie Mae. A few months ago it was made clear that Freddie Mac and Fannie Mae would be protected while other smaller banks would be allowed to fail. Now with Freddie and Fannie running into serious financial problems (Freddie Mac stock has sank from 65.88 to 4.75). Oddly enough one of the problems Freddie Mac faces is that because the US government has made it clear Freddie Mac is too large to fall, investors are hesitant to give funds to Freddie Mac under the assumption that their investment will not be repaid following a government takeover.
So what will happen following the government takeover of Freddie Mac. Personally I think it will be positive. Over the last several months Freddie Mac has created a pretty large list of loans they will not provide backing for. This has hurt the ability of people to get loans and in turn has been one of the negative factors dragging down the national real estate market. If the government takes over Freddie Mac a lot of these restrictions will probably be pulled back. So while it won't magically cure all the problems with the national real estate market it will alleviate at least one of the negative factors weighting it down.
Ki works as a realtor in the central Austin real estate market. His site provides a search of the Austin MLS and a free mortgage calculator along with general information for buyers about Austin real estate.
Aug. 19, 2008
For the second week in a row 30 year mortgage rates held steady at 6.52. 15 year mortgages last week moved from 6.07 to 6.1. The week they returned to 6.07. So basically the fixed rates are holding steady. 5 Year Arms fell from 6.05 to 6.02 and 1 Year Arms fell from 5.22 to 5.18. So they didn't move that much. But what is interesting is the overall trend. This week marks the 3rd week in a row that both 5 and 1 year arms have fallen. The 1 year arm has fallen from 5.49 to 5.18. This continues an overall trend of the difference between 30 Year Fixed mortgages and 1 Year growing. On May 1st 30 Year Arms were at 6.06 and 1 Year Arms were at 5.29. Mortgage rates since then have risen up to 6.52 while 1 Year arms have fallen to 5.18. The question of course is why banks are making arms (the mortgage product that is partly responsible for the high rate of foreclosures) more attractive. And I don't have an answer on that. Below are the mortgage rates for the last few weeks.
August 14,2008
30-yr 6.52 15-yr 6.07 5-yr ARM 6.02 1-yr ARM 5.18
August 7,2008
30-yr 6.52 15-yr 6.1 5-yr ARM 6.05 1-yr ARM 5.22
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
As always I like to translate the mortgage rates into an actual mortgage payment. So using our free mortgage calculator below are what today's rates would translate into for a 200k mortgage. I also run the numbers based on what mortgage rates were at on May 1st.
August 14th
30-yr $1266.76
15-yr $1695.28
5-yr ARM $1201.67
1-yr ARM $1095.75
May 1st, 2008
30-yr $1206.82
15-yr $1643.73
5-yr ARM $1164.60
1-yr ARM $1085.89
On the one hand in general I am against arms. They are generally dangerous so I don't like to recommend them. But with such a wide gap between arms and traditional mortgages they are hard to ignore. If you do get an arm I would be prepared for your mortgage to jump substantially. For the most part I would consider an arm if you had enough money in savings to pay off the property if rates jumped up dramatically over the year.
The other factor to consider when getting a mortgage is credit scores. While for the first half of 2007 all one had to do to get a mortgage was show up at a bank over the last years banks have gotten a lot tighter. Additionally, interest rates now more than ever are tied to ones credit score. So if you are planning on buying a house sometime in the near future its a good idea to figure out what your credit score is now to make sure there are no outstanding debts or problems you need to fix.
Escapeso Realty provides current information on mortgage interest rates on their site. They also provide a free mortgage calculator and a mortgage rates widget.
Aug. 11, 2008
Mortgage interest rates were virtually unchanged this week. The 30 Year rate stayed even at 6.52. The 15 year rate moved up a little from 6.07 to 6.10 and the 5 year arm moved down from 6.07 to 6.05. The only rate that moved much was the one year are which fell from 5.27 to 5.22. The one year Arm had the biggest fall last week as well. So in total for the last two weeks the 1 year arm has fallen from 5.49 to 5.22 while the other 3 major mortgage products have not fallen more than .11. Why the one year ARM is looking so good is another question. A high percent of the foreclosures the country is currently dealing with are from ARM based mortgages. So it seems odd to encourage ARMs when they are partially responsible with the current mess we are in. Of course the people in charge of the various mortgage companies didn't lose billions in shareholder wealth in just two years by making prudent decisions. So who knows what their current strategy is. Here are mortgage interest rates for the major mortgage products for the last few weeks.
August 7,2008
30-yr 6.52 15-yr 6.10 5-yr ARM 6.05 1-yr ARM 5.22
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
As always what do all these crazy numbers mean. To put these numbers in perspective lets see what these rates translate into for a mortgage on a 200k house.
August 7th
30-yr $1266.76
15-yr $1698.53
5-yr ARM $1205.53
1-yr ARM $1100.69
July 31th
30-yr $1266.76
15-yr $1695.28
5-yr ARM $1208.11
1-yr ARM $1106.88
July 24th
30-yr $1281.28
15-yr $1707.22
5-yr ARM $1219.75
1-yr ARM $1134.32
On the one hand I am usually pretty against ARMs. But a difference of 166.07 a month is pretty hard to ignore. If you are thinking of getting a 1 Year ARM this my advice. 1) Make sure you have 12 months of mortgage payments in a liquid account. 2) Watch the rates over the next year and wait for rates to come down a bit. If they don't come down and instead come up make sure you can afford to refinance at a higher rate. 3) this should be obvious from point one and two but if you are getting a 1 Year Arm dont get anywhere near your maximum loan amount. So if you are approved for a 300k loan it might be ok to get a 1 Year ARM if you are buying a house that is 150k-200k. If you are approved for a 300k loan and get a house for 280k get a 30 Year loan its simply not worth the risk. With an ARM your mortgage rate will simply start to flucuate after a year unlike a balloon where you are forced to refinance.
Escapeso Realty is a small brokerage in Austin Texas. Their site provides updated graphs on mortgage interest rates. They provide a free mortgage calculator along with a mortgage rates widget
Aug. 4, 2008
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 fluctuated from 6.09 to 6.45. Then last week 30 year mortgage rates jumped from 6.26 to 6.63. At the time we predicted that rates would probably fall this week because usually after big spikes there is a bit of 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 from 6.63 to 6.52. The only mortgage product to 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 is 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. 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.
Ki works in Austin Texas as a realtor. His website provides information on mortgage interest rates along with a free mortgage calculator. Their is also graphs that show historical mortgage interest rates
Jul. 29, 2008
After falling for most of the month of July Mortgage interest rates jumped up. And not only did they move up they jumped to the highest levels we have seen in 2008. 30 Year rates jumped from 6.26 to 6.63 last week. To put that in perspective for the entire month of May mortgage rates fluctuated between 5.98 to 6.08. The increases were not confined to 30 Year rates, 15 year rates went from 5.78 to 6.18, 5 Year Arms went from 5.80 to 6.16 and 1 Year Arms went from 5.10 to 5.49. The interest rates we saw this week for all the major 4 mortgage products were the highest numbers we have seen for all of 2008. When was the last time we saw mortgage rates this high? I looked back through 2007 to find the last time we saw rates this high for the different mortgage products.
30 year - August 2 , 2007
15 Year - August 16, 2007
5 Year - September 20, 2007
1 Year - December 27, 2008
Below are mortgage rates for the last few weeks.
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
June 26,2008
30-yr 6.45 15-yr 6.04 5-yr ARM 5.99 1-yr ARM 5.27
Ok so mortgage rates are one thing. But what does this mean for an actual mortgage. using our free mortgage calculator and pulling a number out of a hat we looked at how these rate increases would affect a 200k mortgage.
July 24th
30-yr $1281.28
15-yr $1707.22
5-yr ARM $1219.75
1-yr ARM $1134.32
July 17th
30-yr $1232.73
15-yr $1664.03
5-yr ARM $1173.5
1-yr ARM $1085.89
So starting off the monthly payment on a 200k mortgage with 30 Year loan would be $48.55 more this week compared to last (1232.73 to 1281.28). A 15 Year mortgage would have increased $43.19, a 5 year mortgage increased $46.25, and a 1 year mortgage would have increased $48.43.
So why have rates risen so dramatically. A few bank closures have probably caused some uncertainty in the market. Additionally the FED spent the early part of the year trying to keep rates down and basically ignoring the risk of inflation. That has changed as inflation signs have started to crop up. So now the FED is worried more about the risk of inflation.
So usually when one mortgage product rises I advise potential home buyers to look at the other mortgage products. But this week all the mortgage products rose more or less equally. Therefore my advice would be to start looking at putting down more cash. With interest rates moving up near 7 it might be a good idea to evaluate other investments and consider putting a large down payment on a house. If you are thinking of buying a house in the next few months its probably a good idea to start paying more attention to savings.
So what is going to happen next week? Usually after we see a sudden large increase or decrease the next week we see rates move a little bit in the opposite direction. But what happens with mortgage interest rates over the next week and the next few months to a large extent is going to be based on what happens with the banks and the mortgage industry and at this point with all the turmoil in the markets its a little hard to predict what is going to happen next.
Ki provides updated information on mortgage interest rates along with a mortgage interest rates widget. His site also provides a free mortgage calculator.
Jul. 23, 2008
For the second week in a row mortgage rates have fallen. For those that don't read my updates regularly I wanted to give a short background on what rates have been doing. From the end of April to the beginning of June 30 year mortgage rates hovered around 6 percent. Then during the month of June 30 year mortgage interest rates rose peaking out at 6.45 at the end of June. But since then rates have fallen through the month of July ot 6.26. So we are not down to 6 but rates have come down quite a bit from their recent high. Its also interesting rates have fallen although the FED has cut the Fed Funds rate or the discount rate since April 30th. Below are mortage interest rates for the major mortgage products for the last 5 weeks.
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
June 26,2008
30-yr 6.45 15-yr 6.04 5-yr ARM 5.99 1-yr ARM 5.27
June 19,2008
30-yr 6.42 15-yr 6.02 5-yr ARM 5.89 1-yr ARM 5.19
Mortgage rates are nice to look at but what do these mortgage rates flucatuations mean for a mortgage. Using our free mortgage calculator we can run the numbers and see how these mortgage rate changes would affect the mortgage on a 200k loan.
July 17th
30-yr $1232.73
15-yr $1664.03
5-yr ARM $1173.5
1-yr ARM $1085.89
June 26th
30-yr $1257.56
15-yr $1692.03
5-yr ARM $1197.81
1-yr ARM $1106.88
June 5th
30-yr $1210.69
15-yr $1650.11
5-yr ARM $1136.83
1-yr ARM $1080.98
For a 30 Year mortgage on June 5th the monthly mortgage payment would have been $1210.69. Three week later on June 26th a mortgage on the same amount would have risen 4% to $1257.56. Now another 3 weeks the mortgage payment has fallen 2% to $1232.73
The other major change occuring with mortgages is that banks are becoming more selective in giving out mortgages. We have noticed over the last month that more restrictions from lenders have been coming into play. So although mortgage rates are relatively low it has become more difficult to get a loan. Over the last few years lenders would give a loan to anyone that could walk in the door this has changed over the last year. This is why potential home buyers should start paying more attention to their credit scores. Also lenders are expecting larger downpayments. Lenders are also cracking down on investment loans. The biggest change has been that most lenders are not allowing borrowers to get more than 4 investment loans. This has essentially stopped many investors from purchasing new properties.
So what do we expect to happen in the future. The general feeling among mortgage brokers is that lenders are unlikely to return to the free wheeling style we saw in 2006. But at the same time its likely that the current extreme restrictions in lending might ease up some over the next six months.
Ki is a real estate agent in Austin. His website has current information on mortgage interest rates. Along with a free mortgage calculator and information on historical mortgage interest rates
Jul. 13, 2008
So what has been going on in the world of finance and mortgages? Certainly the biggest news was the fall of IndyMac. Last week we heard that IndyMac had stopped giving out new mortgage loans and was going to concentrate on simply servicing the existing loans in its portfolio. Apparently this was due to the fact that regulators felt that IndyMac was not adequately capitalized.
Many experts speculated that the days of IndyMac were numbered and might not last the year. They were right and not only did they not make it through the year they didn't even survive the rest of the week. On Friday it was announced that IndyMac was seized by US banking regulators. This was preceded by a rush on the bank by panicked depositors. The insurance fund currently has around 53 billion so the failure of IndyMac should be a significant drain of the insurance fund. The failure of the bank should cost the government insurance fund between 4 to 8 billion.
Moving on what is going on with mortgage rates this month. After rates rose through the month of June rates have fallen off in the first 2 weeks of July. This is good news because the rates feel in spite of the FED choosing not to lower rates at their last meeting. Rates on all the major mortgage products (30 Year, 15 Year, 5 Year and 1 Year) from the week of June 26 to July 3. Then rates for the most part held steady from July 3rd to July 10th. Rates fell the most on 5 Year Arms.
Its interesting to note that the spread between 5 Year Arms and 30 Year fixed notes has increased over the last month making 5 Year Arms more attractive. Below are the rates for the major mortgage products for the last few weeks.
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
June 26,2008
30-yr 6.45 15-yr 6.04 5-yr ARM 5.99 1-yr ARM 5.27
June 19,2008
30-yr 6.42 15-yr 6.02 5-yr ARM 5.89 1-yr ARM 5.19
June 12,2008
30-yr 6.32 15-yr 5.93 5-yr ARM 5.70 1-yr ARM 5.09
June 5,2008
30-yr 6.09 15-yr 5.65 5-yr ARM 5.51 1-yr ARM 5.06
Moving on lets look at mortgage payments. I like to translate mortgage interest rates into how they would affect a mortgage payment because at the end of the day that is what we are dealing with. So breaking out our free mortgage calculator lets see what these rates mean for a mortgage on a 200k house.
July 10th
30-yr $1247.08
15-yr $1678
5-yr ARM $1176.05
1-yr ARM $1094.51
July 3rd
30-yr $1244.47
15-yr $1679.08
5-yr ARM $1170.96
1-yr ARM $1094.51
June 5th
30-yr $1210.69
15-yr $1650.11
5-yr ARM $1136.83
1-yr ARM $1080.98
So what do we see happening over the next few months. At the beginning of the summer we felt rates would rise because the FED decided to stop cutting rates. Rates rose for a month and then recently have held steady and then felt a bit. Moving forward I don’t have a clear idea what will happen with rates. I would have thought rates might fallen but with the fall of IndyMac the mortgage industry does not seem to be stabilizing so its uncertain what will happen with rates over the next month.
Ki works in Austin. His site is filled with information about mortgage interest rates along with providing a free mortgage rates widget and a free mortgage calculator.
Jul. 2, 2008
After rising drastically last week fixed mortgage interest rates moved up slightly this week. 30 Year notes moved from 6.42 to 6.45 and 15 Year notes moved from 6.02 to 6.04. ARMS on the other hand rose a decent amount. 5 Year Arms rose from 5.89 to 5.99 while 1 Year Arms rose from 5.19 to 5.27. Below are mortgage rates for the last few weeks.
June 26,2008
30-yr 6.45 15-yr 6.04 5-yr ARM 5.99 1-yr ARM 5.27
June 19,2008
30-yr 6.42 15-yr 6.02 5-yr ARM 5.89 1-yr ARM 5.19
June 12,2008
30-yr 6.32 15-yr 5.93 5-yr ARM 5.70 1-yr ARM 5.09
June 5,2008
30-yr 6.09 15-yr 5.65 5-yr ARM 5.51 1-yr ARM 5.06
May 29,2008
30-yr 6.08 15-yr 5.66 5-yr ARM 5.62 1-yr ARM 5.22
May 22,2008
30-yr 5.98 15-yr 5.55 5-yr ARM 5.61 1-yr ARM 5.24
Using our free mortgage calculator lets run the numbers on a 200k loan based on todays rates. We also put in what the mortgage would be a week and a month ago.
June 26th
30-yr $1257.56
15-yr $1692.03
5-yr ARM $1197.81
1-yr ARM $1106.88
June 19th
30-yr $1253.6
15-yr $1689.87
5-yr ARM $1184.99
1-yr ARM $1096.98
May 29th
30-yr $1209.4
15-yr $1651.19
5-yr ARM $1150.68
1-yr ARM $1100.69
So looking at the numbers above one would have saved almost $50 by getting a 30 Year loan a month ago compared to today. In contrast a mortgage on a 1 Year Arm has remained relatively constant. Why Banks would want to promote 1 Year Arms is anyones guess. Based on the other recent decisions by banks it would not be a bad assumption to assume banks have no idea what they are doing this point.
At this point getting a 5 Year Loan doesnt really seem worth it compared to getting a 30 Year loan since the cost savings is not that high (5%). On the other hand if you plan on keeping the property for a short period of time a 1 Year loan seems attractive considering the cost savings(12%).
Ki lives in Austin. His website has information on Austin real estate along with search of the Austin MLS and market stats on his Austin real estate blog.
Jun. 24, 2008
Up up and away. Mortgage interest rates continue on their upward trajectory. 30 Year mortgage rates went from 6.32 to 6.42. 15 year notes rose from 5.93 to 6.02 and 5 year arms rose almost 20 basis point going from 5.7 to 5.89. 1 Year arms rose this week from 5.09 to 5.19. But unlike the other mortgage products (which are higher) 1 Year Arms remain about where they were a month ago. As we have talked about for the last several months since the FED is no longer cutting rates we can expected rates to rise throughout the summer. The only question is when they will stop rising and start stabilizing. Below is the rates for the last month.
June 19,2008
30-yr 6.42 15-yr 6.02 5-yr ARM 5.89 1-yr ARM 5.19
June 12,2008
30-yr 6.32 15-yr 5.93 5-yr ARM 5.70 1-yr ARM 5.09
June 5,2008
30-yr 6.09 15-yr 5.65 5-yr ARM 5.51 1-yr ARM 5.06
May 29,2008
30-yr 6.08 15-yr 5.66 5-yr ARM 5.62 1-yr ARM 5.22
May 22,2008
30-yr 5.98 15-yr 5.55 5-yr ARM 5.61 1-yr ARM 5.24
May 15, 2008
30-yr 6.01 15-yr 5.60 5-yr ARM 5.57 1-yr ARM 5.18
Breaking out our free mortgage calculator lets see how the increasing rates have changed the payment on a 200k loan.
June 19th
30-yr $1253.63
15-yr $1689.87
5-yr ARM $1184.99
1-yr ARM $1096.98
May 15th
30-yr $1196.53
15-yr $1639.47
5-yr ARM $1149.41
1-yr ARM $1103.16
Mortgage payments on most of the mortgage products went up quite a bit over the last month. Looking at a 30 year note the mortgage on a 200k loan has increased $57.10 or about 4.8 percent in a little over a month. In fact the only mortgage product to fall is the 1 Year Arm ($6.18 or about 0.5 percent). Why banks would want to push ARM which is the very loan product that caused all the problems in the first place is anyones guess. Although I typically avoid ARMs the cost savings on a 1 or 5 Year ARM is hard to ignore. That said I would only look at ARMs if you think their is a reasonable chance you will sell your property in that time frame. The general expectation is that rates should be higher and not lower in a few years.
So the question remains where are rates going to be in the next month. While I was fairly confident that rates would rise this month I am not as sure what will happen in a month. If the FED continues to avoid anymore rate cuts I would expect to see mortgage rates at about the same level or higher. Banks have been dealing with massive losses from foolish bets on subprime loans and are looking to make up for these losses through higher mortgage rates.
Another change occuring with loans is a limit on the number of investment properties an individual can recieve a loan on. It looks like most banks are limiting the number of investment property loans per individual to 4. This should obviously have a negative effect on investment properties. I also expect to see more cash offers from investors looking to pick up properties at currently depressed prices.
Personally I think this rule is a little bit foolish. I would make more sense to limit loans based on some networth to total loan amount ratio. For instance if someone has 2 million in the bank it seems reasonable to allow them to buy 5 duplexes for 180k. But if the banks were well run they probably would not be swimming in subprime debt right now.
Ki is real estate agent in Austin Texas. He runs a website covering the ins and out of Austin real estate along with providing a free search of the Austin MLS and market information on his Austin Real Estate Blog.
May. 29, 2008
Mortgage rates on 30 Year Arms and 15 Year Arms jumped up this rate. 30 Year Mortgage Rates went from 5.98 to 6.08 and 15 Year rates went fom 5.55 to 5.66. Rates on 5 and 1 year ARMS remained relatively unchanged.
May 29,2008
30-yr 6.08 15-yr 5.66 5-yr ARM 5.62 1-yr ARM 5.22
May 22,2008
30-yr 5.98 15-yr 5.55 5-yr ARM 5.61 1-yr ARM 5.24
May 15, 2008
30-yr 6.01 15-yr 5.60 5-yr ARM 5.57 1-yr ARM 5.18
May 8, 2008
30-yr 6.05 15-yr 5.60 5-yr ARM 5.67 1-yr ARM 5.29
May 1, 2008
30-yr 6.06 15-yr 5.59 5-yr ARM 5.73 1-yr ARM 5.29
So using our free mortgage calculator lets see what these numbers translate into for a 200k mortgage.
May 29th
30-yr $1209.4
15-yr $1651.19
5-yr ARM $1150.68
1-yr ARM $1167.36
May 22th
30-yr $1196.53
15-yr $1639.47
5-yr ARM $1149.41
1-yr ARM $1103.16
Since the FED has signaled that they are not going to continue to cut rate I expect rates to go higher over the course of the summer. Here are rates over the last few weeks.
Ki is a realtor working with investors in the Austin real estate market. He provides visitors a graphical search of the Austin MLS and updated commentary on the market on his Austin real estate blog.
May. 24, 2008
Mortgages rates fell this week for 30 Year loan (6.01 to 5.98) and 15 year rates (5.6 to 5.55). Rates on 5 and 1 year arms increased (5.57 to 5.61 and 5.18 to 5.24) respectivly. Another interesting point is that 30 Year rates have now fallen for 4 weeks in a row which is an encouraging sign although it would be nice to have seen rates fall a little more.
May 22,2008
30-yr 5.98 15-yr 5.55 5-yr ARM 5.61 1-yr ARM 5.24
May 15, 2008
30-yr 6.01 15-yr 5.60 5-yr ARM 5.57 1-yr ARM 5.18
May 8, 2008
30-yr 6.05 15-yr 5.60 5-yr ARM 5.67 1-yr ARM 5.29
May 1, 2008
30-yr 6.06 15-yr 5.59 5-yr ARM 5.73 1-yr ARM 5.29
So what would these rates translate into for a mortgage. Using our free mortgage calculator lets run some numbers.
Using our free mortgage calculator lets run the numbers on a 200k Loan
May 15th
30-yr $1196.53
15-yr $1639.47
5-yr ARM $1149.41
1-yr ARM $1103.16
May 15th
30-yr $1200.38
15-yr $1711.46
5-yr ARM $1144.37
1-yr ARM $1095.75
At this point I would still favor a 30 Year loan over an arm. But getting an arm over a 30 Year arm you would only save $47.12 which considering rates will probably be higher when the loan resets does not really seem worth it.
Ki works with buyers and sellers in the Austin real estate market. His site has a free search of the Austin MLS along with information on his Austin real estate blog.
May. 16, 2008
Here is a breakdown for the last few weeks.
May 15, 2008
30-yr 6.01 15-yr 5.60% 5-yr ARM 5.57 1-yr ARM 5.18
May 8, 2008
30-yr 6.05 15-yr 5.60% 5-yr ARM 5.67 1-yr ARM 5.29
May 1, 2008
30-yr 6.06 15-yr 5.59% 5-yr ARM 5.73 1-yr ARM 5.29
April 24th, 2008
30-yr 6.03 15-yr 5.62% 5-yr ARM 5.68 1-yr ARM 5.29
So what would these rates translate into for a mortgage. Using our free mortgage calculator lets run some numbers.
Using our free mortgage calculator lets take a look at what the mortgage payment would be for a 200k loan. The mortgage payment is $1.29 less than what it would have been last week. Considering that the FED cut rates I was a little dissappointed. I was hoping for rates to drop a little more this week.
May 15th
30-yr $1200.38
15-yr $1711.46
5-yr ARM $1144.37
1-yr ARM $1095.75
May 8th, 2008
30-yr $1205.53
15-yr $1711.46
5-yr ARM $1157
1-yr ARM $1109.36
Ki helps clients in the Austin real estate market. His site has a free search of the Austin MLS along with information on his Austin real estate blog.
May. 9, 2008
So what happened with mortgage interest rates this week? Not much. For the second week in a row mortgage rates pretty much stayed the same.
May 8, 2008
30-yr 6.05 15-yr 5.60% 5-yr ARM 5.67 1-yr ARM 5.29
May 1, 2008
30-yr 6.06 15-yr 5.59% 5-yr ARM 5.73 1-yr ARM 5.29
April 24th, 2008
30-yr 6.03 15-yr 5.62% 5-yr ARM 5.68 1-yr ARM 5.29
April 17th, 2008
30-yr 5.88 15-yr 5.40% 5-yr ARM 5.48 1-yr ARM 5.10
Using our free mortgage calculator lets take a look at what the mortgage payment would be for a 200k loan. The mortgage payment is $1.29 less than what it would have been last week. Considering that the FED cut rates I was a little dissappointed. I was hoping for rates to drop a little more this week.
May 8th, 2008
30-yr $1205.53
15-yr $1711.46
5-yr ARM $1157
1-yr ARM $1109.36
May 1st, 2008
30-yr $1206.82
15-yr $1643.73
5-yr ARM $1164.60
1-yr ARM $1085.89
At this point I don't expect rates to drop in the near future. The FED basically said at the last meeting that they didnt plan on making any more rate cuts. So until banks start to develop a more positive outlook on the economy I would not expect rates to come down any more. So if you are thinking of doing a refi or locking in an interest rate on a house this might not be a bad time.
Ki works as an Austin realtor helping clients look for homes in the Austin Texas real estate market. His site provides a free search for Austin homes.
May. 4, 2008
May 1, 2008
30-yr 6.06 15-yr 5.59% 5-yr ARM 5.73 1-yr ARM 5.29
April 24th, 2008
30-yr 6.03 15-yr 5.62% 5-yr ARM 5.68 1-yr ARM 5.29
April 17th, 2008
30-yr 5.88 15-yr 5.40% 5-yr ARM 5.48 1-yr ARM 5.10
April 10th, 2008
30-yr 5.88 15-yr 5.42% 5-yr ARM 5.56 1-yr ARM 5.19
Not much changed with mortgage rates over the last week. 30 Year and 5 Year ARM's went up a tad and 15 Year Mortgages came down a bit. These rates were collected right before the FED cut interest rates they might fall a little more.
So lets see what these rates would mean for a 200k loan. Using our free mortgage calculator.
April 24th, 2008
30-yr $1202.96
15-yr $1646.93
5-yr ARM $1158.26
1-yr ARM $1085.89
May 1st, 2008
30-yr $1206.82
15-yr $1643.73
5-yr ARM $1164.60
1-yr ARM $1085.89
Ki is a realtor in Austin. He runs a site about Austin Texas real estate which hosts a free search of the Austin Homes along with a Austin real estate blog.
Apr. 26, 2008
April 24th, 2008
30-yr 6.03 15-yr 5.62% 5-yr ARM 5.68 1-yr ARM 5.29
April 17th, 2008
30-yr 5.88 15-yr 5.40% 5-yr ARM 5.48 1-yr ARM 5.10
April 10th, 2008
30-yr 5.88 15-yr 5.42% 5-yr ARM 5.56 1-yr ARM 5.19
April 3rd, 2008
30-yr 5.88 15-yr 5.42% 5-yr ARM 5.59 1-yr ARM 5.18
After holding steady for a few weeks it looks like current mortgage interest rates have increased pretty much across the board. Most of the mortgage products increased by about .2 points except for 30 Year Rates which increased by .15 points. Compared to mortgage rates for the last 2 years rates are still relatively low.
So what does this mean for mortgage payments. Lets look at what these rates would mean for a loan of 200k. Using our free mortgage calculator lets take a quick look.
April 17th, 2008
30-yr $1183.71
15-yr $1623.57
5-yr ARM $1133.06
1-yr ARM $1109.36
April 24th, 2008
30-yr $1202.96
15-yr $1646.93
5-yr ARM $1158.26
1-yr ARM $1085.89
Because 30 Year rates did not increase as much at rates on ARMs I would still recommend getting a 30 Year loan instead of an ARM. Mostly because I expect rates to increase so when an ARM expires the note holder will probably have a higher rate.
Ki is a realtor in Austin. He runs a site about Austin real estate which has a search of the Austin MLS along with market analysis on his Austin real estate blog
Apr. 19, 2008
In Greek mythology, the hydra was a beast that, when one of its many heads were severed, would grow new heads in their place. The sub-prime mortgage crisis has developed in a similar fashion, initially appearing to be constrained to a sector of unworthy credit borrowers who likely didn't have the financial ability to own a home normally. However, this expected loss translated into falls in construction, consumer spending, and widespread mortgage defaults in prime markets. This hydra doesn't respond well to lip service, such as the interest rate freezing plan ushered in by the US Treasury which is constrained to a statistically small minority of distressed homeowners.
Yet the knock-on effect of the sub-prime crisis that has gotten the most attention is relatively removed from those experiencing foreclosure: the financial sector, overexposed and reeling from massive writedowns due to investment in securities backed by these same sub-prime mortgages. However, both sides of this crisis can be traced to the changing relationship between monetary policy and reality. Real interest rates, those which banks charge each other for overnight lending, have remained stubbornly above their historical highs, reflecting the reluctance of banks to let go of needed capital. Consumer confidence is at its lowest level since the statistics were taken, asserting the credit crunch's diffusion into the larger economy. With such widespread signals of an economic downturn, the Federal Reserve has been the focus of many investors, especially after the unprecedented bailout of troubled investment bank Bear Stearns.
When the Fed lowers their discount rate, the cut is generally assumed to filter throughout the financial system, making loans cheaper for everyone and stimulating the economy. The US central bank has also not shied away from its ability to auction funds, which it has done liberally in order to stem further liquidity issues. While banks have taken advantage of more cheaper money, they have not passed all those savings on to others, and mortgage interest rates while low remain higher than would be expected. These rates affect both the returns on stocks for investors all over the world, but also rates for other loans from mortgage payments to fundraising efforts to buy up the troubled derivatives that began wreaking havoc on balance sheets a year ago. If the Fed is to maintain its credibility as a viable beacon of stability, then they will need to rein in with regulation further in the future or risk losing their legitimacy: that inflation remains within target levels, if on the high end of the spectrum. Until banks are completely through writing down losses, lending is not likely to get much cheaper. In fact, with plenty of investors jumping ship to profitable commodities, raising capital for necessities like student loans are going to be harder to come by. Analysts have projected that 10% of the lowest bracket of previous year's accepted borrowers expected not to qualify under recently tightened standards. Interest rates will reap an unprecedented level of control over the livelihoods of millions of Americans to an extent seldom seen.
Ki is a realtor/broker in Austin Texas working with homebuyers in the Austin real estate market. His site provides users a free graphical search of the Austin MLS along with a free mortgage calculator.
Apr. 19, 2008
April 17th, 2008
30-yr 5.88 15-yr 5.40% 5-yr ARM 5.48 1-yr ARM 5.10
April 10th, 2008
30-yr 5.88 15-yr 5.42% 5-yr ARM 5.56 1-yr ARM 5.19
April 3rd, 2008
30-yr 5.88 15-yr 5.42% 5-yr ARM 5.59 1-yr ARM 5.18
March 27th, 2008
30-yr 5.85 15-yr 5.34% 5-yr ARM 5.67 1-yr ARM 5.24
For the 4th week in a row 30 YR Rates have remained relatively unchanged. Rates fell in the middle of March after the FED cut interest rates. At that point mortgage interest rates fell from 6.13 to 5.87. Since then banks have kept 30 Yr mortgage interest rates roughly the same. This can be as a sign banks are happy with the current difference between mortgage rates and the FED rates.
After the FED cut interest rates in mid March instead of rates on 5 and 1 year arms increased. But over the last 2 weeks rates on ARMs have decreased as well.
Another interest factor is what these rates translate to for a loan of 200k. Using our free mortgage calculator lets take a quick look.
April 17th, 2008
30-yr $1183.71
15-yr $1623.57
5-yr ARM $1133.06
1-yr ARM $1085.89
If we consider the fact that currently rates are relatively still low and when ARMs expire they could be higher I would still recommend getting a 30 Year Loan instead of an ARM.
Ki is a realtor in Austin. He runs a site about Austin TX real estate which has a search of the Austin MLS along with market analysis on his Austin real estate blog
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