Mortgage Rates Continue To Flatline

The 30 year rate fell from 5.01 to 4.97 this week. What's been interesting over the last month is that although we are still in a period of economic uncertainty rates have stayed amazingly flat. Since January 14th 30 year rates have stayed between 4.97 and 5.06. We are starting to see more volatility in the other mortgage products though. The 15 year dropped from 4.40 to 4.34. The 5 year arm dropped from 4.27 to 4.19 and the 1 year arm rose from 4.22 to 4.33. Below are rates from the weeks from Jan 14, 2010 to Feb 11, 2010

Feb 11, 2010
30-fixed 4.97 15-fixed 4.34 5 ARM 4.19 1 ARM 4.33

Feb 04, 2010
30-fixed 5.01 15-fixed 4.40 5 ARM 4.27 1 ARM 4.22

Jan 28, 2010
30-fixed 4.98 15-fixed 4.39 5 ARM 4.25 1 ARM 4.29

Jan 21, 2010
30-fixed 4.99 15-fixed 4.40 5 ARM 4.27 1 ARM 4.32

Jan 14, 2010
30-fixed 5.06 15-fixed 4.45 5 ARM 4.32 1 ARM 4.39

Aug 13, 2009
30-fixed 5.29 15-fixed 4.68 5 ARM 4.75 1 ARM 4.72

So what is going on with rates? It seems that although the economy is on uncertain ground with a potential recovery swaying in the balance not much is actually happening. In general things are not getting worse and things are not getting better. The lack of movement in the mortgage market is relatively good news for potential mortgage seekers. Although rates are above all time lows they are still low by historical standards. Having the 30 year rate be below 5 percent was unheard of just a few years ago. So in addition to mortgage rates it's always interesting to look at mortgage payments. Using our mortgage calculator we determined the mortgage payment on a 200k loan. We took rates from February 11th, January 28, and August 13th to do the conversion. Below are the results.

Feb 11
30-year $1069.97
15-year $1513.68
5-year ARM $976.86
1-year ARM $993.26

Jan 28
30-year $1071.19
15-year $1518.76
5-year ARM $983.87
1-year ARM $988.56

Aug 13
30-year $1109.36
15-year $1548.44
5-year ARM $1043.29
1-year ARM $1039.68

As we can see over the last two weeks mortgage payments have not moved much with the 30 year payment dropping by 0.11 percent.

So what is our advice to those looking for a home? First I would start looking at credit reports earlier on. Banks are still pretty picky and relatively small problems can increase your eventual mortgage rate and stop your loan from being approved altogether. In addition, I would lock in earlier rather than later. It's hard to know what rates are going to do over the next month. There is a good chance they could stay flat but if they see some volatility its more likely they will move up rapidly than move down rapidly. In fact the chance of them moving below 4.7 is pretty low. Looking more long term the expectation is that rates are going to be higher in the next few years. So although the rates are lower it's probably best to avoid the 1 and 5 year arms.