After rising steadily for the last 3 weeks mortgage rates fell back down this week. The 30 year rate fell from 5.03 to 4.98. The 15 year rate fell from 4.46 to 4.40. The 5 and 1 year arm fell from 4.42 to 4.35 and 4.57 to 4.47 respectively. This looks like more of a hiccup as mortgage rates steadily start there rise. At this point the overwhelming consensus is that mortgage rates are going to rise in the next six months. But the lowered rates do provide an opportunity for potential homeowners to lock in rates at sub 5.00 rates. Below are rates from the weeks from October 8, 2009 to November 5, 2009.

Nov 05, 2009
30-yr 4.98 15-yr 4.40 5-yr ARM 4.35 1-yr ARM 4.47

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Oct 08, 2009
30-yr 4.87 15-yr 4.33 5-yr ARM 4.35 1-yr ARM 4.53

Apr 16, 2009
30-yr 4.54 15-yr 4.93 5-yr ARM 4.83 1-yr ARM 4.82


As has been the case for several months the interest rate to watch is the 30 year rate. When rates are low (and the expectation is that they are going to rise) there is no real reason to look at short term ARMS.

In addition to looking at rates we also calculated the mortgage payments for a 200k loan based on today's rates.

Nov 05
30-yr $1071.19
15-yr $1519.78
5-yr ARM $995.62
1-yr ARM $1009.8

Oct 22
30-yr $1073.64
15-yr $1522.84
5-yr ARM $1001.52
1-yr ARM $1018.12

Apr 09
30-yr $1015.74
15-yr $1573.26
5-yr ARM $1043.29
1-yr ARM $1057.8

This show how little rates have moved in the last two weeks. For a 30 year loan on a 200k mortgage the payment is $2.45 less a month for a decrease of about 1/5 of 1 percent

So what is our advice? First I would avoid anything but a 30 year mortgage. Their is simply too much of a chance of higher rates. Second I would start looking for a mortgage earlier in the process instead of later. Basically their are too many issues with lending right now and it's a good idea to find out any issues to get a loan earlier in the process. Second it's a good to check into the 7,500 tax credit. The new program has expanded the eligibility so if you didn't qualify for the 8,000 tax credit you might qualify for the new one.


Ki works, and lives, in Austin, Texas. His website arranges details on the Austin Tx real estate market. It also has graphs of mortgage rate trends and a few free mortgage widgets.

After falling for the last 6 weeks mortgage rates started to rise this week. The 30 year rate rose from 4.87 to 4.92. The 15 year mortgage rose from 4.33 to 4.37. Both arms rose as well with the 5 year arm rising from 4.35 to 4.38 and the 1 year arm rising from 4.53 to 4.60. Below are mortgage rates for the last several weeks along with mortgage rates from March 19, 2009.

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Oct 08, 2009
30-yr 4.87 15-yr 4.33 5-yr ARM 4.35 1-yr ARM 4.53

Oct 01, 2009
30-yr 4.94 15-yr 4.36 5-yr ARM 4.42 1-yr ARM 4.49

Sep 24, 2009
30-yr 5.04 15-yr 4.46 5-yr ARM 4.51 1-yr ARM 4.52

Sep 17, 2009
30-yr 5.04 15-yr 4.47 5-yr ARM 4.51 1-yr ARM 4.58

Mar 19, 2009
30-yr 4.98 15-yr 4.61 5-yr ARM 4.98 1-yr ARM 4.91

Overall its not that interesting that rates moved up. Moving up .05 points is not that significant. For the last few months the speculation has been that rates are going to eventually move up. Additionally, the federal government has been pulling back on the amount of mortgage securities it was buying (which was pushing mortgage rates down). So the question is whether this weeks rise in mortgage rates was just normal volatility or the beginning of the steady rise in mortgage rates that some have been predicting. At this point it's an impossible question to answer for the most part we will have to wait and see.

In addition to rates it's also interesting to look at mortgage payments. We took today's rates and determined the mortgage payment on a 200k loan. We also did the same thing with rates from October 1st (2 weeks ago) and March 12, 2009 (6 months ago).

Oct 15
30-yr $1063.88
15-yr $1516.73
5-yr ARM $999.16
1-yr ARM $1025.28

Oct 01
30-yr $1066.32
15-yr $1515.71
5-yr ARM $1003.88
1-yr ARM $1012.18

Mar 12
30-yr $1077.31
15-yr $1544.33
5-yr ARM $1072.42
1-yr ARM $1049.33

Overall looking at mortgage rates/mortgage payments from 2 weeks and 6 months ago we are not seeing a lot of movement. Compared to March 12 (6 months ago) a mortgage payment on a 200k loan would only be $13.42 less a month or 1.24 percent less. By comparison if rates rise to 7 percent (historically about average) a mortgage payment would be 266.72 more a month or a rise of 25%. While a rise to 7 percent seems like a lot many experts are expecting rates to move up to 9 or 10 percent.

So what is our advice for people looking for a mortgage? First it's probably best to start looking for a mortgage early on in the home buying process. It's more difficult to get a loan and waiting to the last minute is not advisable. Additionally, it's probably advisable to lock in a rate earlier instead of later. While mortgage rates could fall its doubtful they could drop by much at this point. On the other hand it's possible that mortgage rates could move up dramatically. So there is more to lose than gain by waiting to lock in on a mortgage. If mortgage rates do start to rise dramatically it could deal a serious blow to the real estate recovery we are currently seeing in several markets around the country.


Ki works in Austin real estate. His site has different mortgage widgets to keep track of mortgage rates. His site escapesomewhere.com has information on Austin along with a blog focused on Austin Texas real estate

Mortgage Rates Fell yet again this week. The 30 year fell from 5.04 to 4.94. This marks the 5th week in a row where mortgage rates have either fallen or held steady. For the most part rates have been slowly falling. In fact this week accounts for half of the total fall in the last five weeks. So how does 4.94 look in a historical context. It is the lowest rate we have seen since May 28th. More importantly though it is lower than any rate we have seen prior to March 26, 2009 in the 40 years we have been compiling reliable data on average mortgage rates.

In addition to the 30 year rate the other major mortgage products fell as well. The 15 year fixed fell from 4.46 to 4.36. The 5 and 1 year arm fell from 4.51 to 4.42 and 4.52 to 4.49 respectively. Below are rates from the last few weeks.

Oct 01, 2009
30-yr 4.94 15-yr 4.36 5-yr ARM 4.42 1-yr ARM 4.49

Sep 24, 2009
30-yr 5.04 15-yr 4.46 5-yr ARM 4.51 1-yr ARM 4.52

Sep 17, 2009
30-yr 5.04 15-yr 4.47 5-yr ARM 4.51 1-yr ARM 4.58

Sep 10, 2009
30-yr 5.07 15-yr 4.50 5-yr ARM 4.51 1-yr ARM 4.64

Sep 03, 2009
30-yr 5.08 15-yr 4.54 5-yr ARM 4.59 1-yr ARM 4.62

Mar 05, 2009
30-yr 5.15 15-yr 4.72 5-yr ARM 5.08 1-yr ARM 4.86

So why are rates falling. The fed has been buying mortgage backed securities to keep rates low. But the expectation is that interest rates cannot stay this low forever. Historically rates are abnormally low and at some point they are going to start moving back up. One thing to watch is the government's buying of mortgage backed securities. To stop inflation from getting out of control the fed needs to stop buying securities once the economy starts improving and recently the fed has started to pull back on the volume of mortgage securities they are purchasing.

In addition to rates its also helpful to look at actual mortgage payments to provide perspective. We translated today's rates into a payment on a 200k mortgage. We also did the same thing with rates from September 17th and February 26th.

Oct 01
30-yr $1066.32
15-yr $1515.71
5-yr ARM $1003.88
1-yr ARM $1012.18

Sep 17
30-yr $1078.53
15-yr $1526.92
5-yr ARM $1014.55
1-yr ARM $1022.89

Feb 26
30-yr $1082.21
15-yr $1548.44
5-yr ARM $1080.98
1-yr ARM $1050.53

Looking at the 30 year rate a mortgage payment is pretty similar to 2 weeks ago and 6 months ago. A 200k mortgage 6 months ago would have been 1.46 percent less or $15.89 less a month.

So what is going to happen moving forward. I would expect rates to stay around 5 for the time being. As long as the government continues buying mortgage backed securities we should see rates at historically low levels. Once the market starts to improve rates will start to increase. If the government is careful and avoids inflation rates should likely rise to 6-8 percent. If the government loses control of inflation we could see rates move up into the double digits.

Ki studied at UT. He hosts a website with a graphical Austin home search. His site also has a graph showing mortgage rate trends along with several mortgage widgets.

Mortgage rates have now dropped for 3 weeks in a row. We are not seeing a lot of movement. 30 year rates have only dropped from 5.14 to 5.04 in the last 3 weeks. What is interesting is that rates are dropping at all. Most of the news have focused on how inflation is pending for the US because of unprecidented government spending. But while the news has focused on pending inflation (and corresponding higher mortgage rates) mortgage rates have continued to drop. Mortgage rates are lower than at any point before 2009 (they were lower in April 2009). Below are rates for the last few weeks along with rates from February 12 (6 months ago)

Sep 17, 2009
30-yr 5.04 15-yr 4.47 5-yr ARM 4.51 1-yr ARM 4.58

Sep 10, 2009
30-yr 5.07 15-yr 4.50 5-yr ARM 4.51 1-yr ARM 4.64

Sep 03, 2009
30-yr 5.08 15-yr 4.54 5-yr ARM 4.59 1-yr ARM 4.62

Aug 27, 2009
30-yr 5.14 15-yr 4.58 5-yr ARM 4.67 1-yr ARM 4.69

Aug 20, 2009
30-yr 5.12 15-yr 4.56 5-yr ARM 4.57 1-yr ARM 4.69

Feb 12, 2009
30-yr 5.16 15-yr 4.81 5-yr ARM 5.23 1-yr ARM 4.94

As we can see in addition to the 30 year the other 3 major mortgage products all fell slightly as well. What interesting is how remarkably stable rates have been for the last 4 weeks. Comparing August 20, 2009 to today the most movement we have seen in any of the four mortgage products is the 1 year arm which has only fallen .11 points.

In addition to rates we like to look at mortgage payments. we calculated out the mortgage payment for a 200k house based on today' rates. We also did the same thing with rates from September 3 (2 weeks ago) and February 12 (6 months ago).

Sep 17
30-yr $1078.53
15-yr $1526.92
5-yr ARM $1014.55
1-yr ARM $1022.89

Sep 03
30-yr $1083.44
15-yr $1534.07
5-yr ARM $1024.09
1-yr ARM $1027.68

Feb 12
30-yr $1093.28
15-yr $1561.86
5-yr ARM $1101.93
1-yr ARM $1066.32

All in all we are not seeing much movement. For the 30 year rate compared to 6 months ago a payment for a 200k mortgage would only be 1.34 percent less (or $14.75 dollars).

So what should we expect to see moving forward. The majority opinion seems to be that we are headed for high inflation. And with high inflation we should also seem substantially higher mortgage rates. Although this is the majority opinion its not the only one. If the economic recovery fails to take hold we could see lower mortgage rates for awhile. Additionally, if the FED times things just right we could avoid inflation and high mortgage rates. I think this is unlikely though because the FED moving prematurely to hold off inflation could hurt the economic recovery.

What is our advice to people looking for a mortgage. My advice is to only consider a 30 year mortgage. With rates expected to increase there is no reason to get a 1 or 5 year arm. I often hear that someone is "sure" they will move in 3 years but plans often change, espically if the real estate market is slow and its difficult to sell the house.



Ki follows mortgage rates news and trends. He works as a Austin realtor. His site has a few mortgage widgets along with information on historical interest rates.

There was not much movement in most of the major mortgage products this week. The 30 year rate dropped from 4.86 to 4.82. This is only slightly above the 4.78 all time low that was reached a few weeks ago. The 15 year rate dropped from 4.52 to 4.50. There was some interesting movement with the 5 and 1 year arm. The 5 year arm dropped from 4.82 to 4.79. At the same time the 1 year arm rose from 4.71 to 4.82. This is the first time the 1 year arm has been above the 5 year arm. Regardless both rates are pointless because they are at or near the same rates for a 30 year arm; therefore there is no reason to get an arm instead of a 30 year mortgage in the current market. Below are mortgage rates for the last few weeks and from 6 months ago on November 20, 2008.

May 21, 2009
30-yr 4.82 15-yr 4.50 5-yr ARM 4.79 1-yr ARM 4.82

May 14, 2009
30-yr 4.86 15-yr 4.52 5-yr ARM 4.82 1-yr ARM 4.71

May 07, 2009
30-yr 4.84 15-yr 4.51 5-yr ARM 4.90 1-yr ARM 4.78

Apr 30, 2009
30-yr 4.78 15-yr 4.48 5-yr ARM 4.80 1-yr ARM 4.77

Nov 20, 2008
30-yr 6.04 15-yr 5.73 5-yr ARM 5.87 1-yr ARM 5.29

As we can see rates have not experienced much movement in the last month. They have continued to hover around all time lows for the month of May. They remain substantially lower than what we saw 6 months ago. In addition to rates we always like to look at actual mortgage payments. We took today's rates and translated them into a mortgage payment for a 200k mortgage. We did the same thing with rates from last week and rates from November 20, 2008.

May 21
30-yr $1051.74
15-yr $1529.98
5-yr ARM $1048.12
1-yr ARM $1051.74

May 14
30-yr $1056.59
15-yr $1532.03
5-yr ARM $1051.74
1-yr ARM $1038.47

Nov 20
30-yr $1204.24
15-yr $1658.67
5-yr ARM $1182.43
1-yr ARM $1109.36

A mortgage payment this week is slightly lower than what it would have been last month. This is nothing compared to the saving one would get compared to 6 months ago. For a 200k house a mortgage payment is $152.50 less a month now than it would have been on November 20, 2008 for a drop of 12.66%. This is often forgotten when the media talks about home prices being down 15% to 20%. After one factors in mortgage rates along with falling house prices the actual payments could be down over 30%.

So what do we expect to happen over the next few months? As long as the economy stays week mortgage rates will probably continue to hover around just under 5%. Once the economy starts to recover the general expectation is that rates should start to rise. It's hard to know how high mortgage rates will go once the economy recovers. Estimates have ranged from 10% to 18%. Most of this will depend on how quickly the economy recovers and if the FED moves quickly enough to changes policies from boosting the economy to slowing inflation.


Ki lives in Austin Texas. He website provides a free Austin home search. He also provides a mortgage calculator widget along with a few other mortgage widgets that show updated information on mortgage rates.