Mortgage Rates Fall And Hit New Low For 2010

The 30 year rate fell from 4.97 to 4.93 this week. Overall rates have been pretty stable. In fact during all of 2010 30 year mortgage rates have stayed between 4.93 and 5.09. This is the 2nd week in a row where rates have fallen. The current rate of 4.93 is the lowest rate reached in 2010 and is somewhat near the all time low of 4.71 reached on December 3, 2009.

The other major mortgage products fell as well this week. The 15 year dropped from 4.34 to 4.33. The 5 and 1 year arms dropped from 4.19 to 4.12 (5 year arm) and 4.33 to 4.23 (1 year arm). Below are rates from the weeks from Jan 21, 2010 to Feb 18, 2010

Feb 18, 2010
30-fixed 4.93 15-fixed 4.33 5 ARM 4.12 1 ARM 4.23

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

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

In addition to rates it's also helpful to look at mortgage payments. We took today's rates and using our mortgage calculator widget we translated them into a mortgage payment on a 200k loan. We also did the same thing with rates from February 4 and August 20th (6 months ago)

Feb 18
30-year $1065.1
15-year $1512.66
5-year ARM $968.71
1-year ARM $981.53

Feb 04
30-year $1074.86
15-year $1519.78
5-year ARM $986.22
1-year ARM $980.37

Aug 20
30-year $1088.35
15-year $1536.12
5-year ARM $1021.7
1-year ARM $1036.07

While rates and payments have fallen from what one would have seen 2 weeks ago the drop has been slight. A 200k mortgage payment is $9.76 less than what one would have seen 2 weeks ago for a drop of slightly less than one percent. Compared to 6 months ago a mortgage payment is $23.25 less for a drop of 2.13 percent.

So what is our advice to people looking for mortgage? Most lenders are still pretty strict on qualification. It's probably best to get your credit score early on in the process to see if there are any problems that could stop you from getting a loan. Waiting until you find the home of your dreams to discover a credit problem that could take 3 months to resolve is far from ideal.

What do we see on the horizon? There is not too much room for mortgage rates to fall further. In fact it's extremely doubtful that rates, currently at 4.93, will fall below there all time low of 4.71. On the other hand the general expectation is that in a year rates will hit 6 percent. So long term we are expecting rates to increase. In the short term it's hard to know where rates are going but they are more likely to rise drastically than to fall drastically.