30-year Mortgage Rates highest in 15 months
 

Rates on 30-Year Mortgages Increase

By MARTIN CRUTSINGER, AP Economics Writer Thu Oct 27,12:14 PM ET

WASHINGTON - Rates on 30-year mortgages stayed above 6 percent for the third straight week, rising to the highest level in 15 months.

Mortgage giant Freddie Mac reported Thursday that the nationwide average for 30-year, fixed-rate mortgages rose this week to 6.15 percent, up from 6.10 percent last week and the highest level since 30-year mortgages were at 6.21 percent in late July 2004.

Rates on all other types of mortgages were up as well this week, reflecting growing nervousness in financial markets about inflation pressures, generated in part by the spike in energy prices in the wake of the lost production following the Gulf Coast hurricanes.

The nation's housing market has been booming this year with sales of both new and existing homes expected to set records for the fifth consecutive year. However, economists are forecasting that the sales pace will slow next year under the impact of higher mortgage rates.

The government reported Thursday that new home sales rose by 2.1 percent in September to a seasonally adjusted 1.22 million, but the median price of a new home fell by 5.7 percent to $215,700, indicating some cooling in demand.

"Although home sales were still impressive in September, mortgage applications in October seem to tapering off a bit, due in large part to slowing rising interest rates," said Frank Nothaft, chief economist for Freddie Mac.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a home mortgage, averaged 5.69 percent this week, up from 5.65 percent last week.

One-year adjustable rate mortgages rose to 4.91 percent. This was up from 4.89 percent last week and pushed the one-year ARM to its highest level since the week ending April 26, 2002.

Rates on five-year hybrid adjustable rate mortgages averaged 5.63 percent this week, up from 5.59 percent last week.

The nationwide averages for mortgage rates do not include add-on fees known as points. The 30-year and 15-year mortgages both carried a nationwide average fee of 0.5 point while the five-year ARM had an average fee of 0.6 point and the one-year ARM had an average fee of 0.7 point.

A year ago, 30-year mortgages averaged 5.64 percent, 15-year mortgages were at 5.01 percent and one-year ARMs averaged 3.96 percent. Freddie Mac does not have historical data on the five-year ARM which it began tracking this year.

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On the Net:

Freddie Mac: http://www.freddiemac.com

And you know what sucks? My mother bought her house with a loan from HUD. They are the devil.

Whatever you do people DONT GET SUCKERED IN BY CREATIVE FINANCING!
it is EVIL! ARM's and the like sound really good but people dont take into consideration that rates will rise, and then they are stuck with a house they cant pay for. Some people buy a home thinking they will somehow make the balloon payment at the end of the term and guess what folks? it would take a miracle or incredible restraint (as in putting aside a certain amount every month on TOP of your monthly payment)

I myself got lucky, I got in two years ago, the rates were still reasonable and I got 30 year fixed, w/impound account so I dont have to come up with extra for taxes twice a year. you cant beat it. and I told my broker what my max monthly payment could be and he did it! so..........I predict a flurry of last minute buying.....or not :lol:

Well, that is not exactly true. Many ARMS are fixed for a limited amount of time and have a cap. For the investor using OPM (other people's money) for the putchase price - they are a good idea because you can buy more on spec. at 4.91% than you can at 6.5% and you are going to sell the house in two years anyway if you are taking advantage of the no cap. gain tax per owner occupant of any profit under $250,000 after two years. Also, if the ARM goes to high, you can always refinance at a new ARM or fixed mortgage with a likely lower rate. To be sure, ARM's are not for everyone, but that are not de facto bad, which you prob. knew but I wanted to go on about it to show how smart I am :laugh: :] :] :]

All adjustable rate mortgages aren't bad. I don't like the negative am ones though.

Weeee! You could be a mortgage broker. :laugh:

I do not really understand those, though I know they will lose money, so you are paying it one way or the other :laugh:

I'd be seen throughout the nation with a sexy blond one :wavey:

You're bascially just deferring interest for 10-15 years, then you have to pay it back.:eek:

Awww...:xoxo:

EEK - is the rate better or worse. I mean if it is worse, why not just pay an extra $100 a month on your reg. mtg. and knock both down.

My FAV. BS mtg tool is when people like Ditech and others was the $500 + fee to allow you to pay bimonthly and "save" all that interest you originally were going to pay. I think that is a sham. I mean if you pay an extra 5-10% a month - you will save far more and save the $500 + fee. Or, just pay them bimonthly anyway with one full payment at the beginning so you are never in a 30 day default, if the contract allows that :shrug:

they sucker you into thinking that you will save so much by doing that but in reality you can do it yourself anyway, if you commit to it.....for example those months that have an extra pay period, if you just pay it on the mortgage, you will end up chopping quite a few years off of your mortgage, as long as there isnt a prepayment penalty...and besides, that fee they charge is bogus~

I personally dont care for anything thats adjustable if you are buying the home you plan on living in. ARM's might be fine for investors like you said, but for the average homeowner, they are tricky and a lot of people get a surprise when the rates go up. I personally cant see the point of selling a home in 3 or 5 years anyway, it doesnt give you much time to build much equity and you are gambling that your value will appreciate enough to pay of the balance and still make a profit.....just doesnt seem sound to me.

I aint moving from my little place, its not much but the way things are costing and the way the economy is tanking (job wise) it just doesnt seem smart. Im not an investor so I cant speak with the same authority as gldstwmn but Ive got a good healthy distrust of any type of creative financing, in the end, it mostly benefits the banks and that chaps my hide.

I wouldn't do an ARM for nothing. It would confuse the hell out of me. I'll stick with my conventional loan, thank you! At least then, I know what the hell is going on with it!

I'm going to brag ... I got my fixed rate mtg back in June 2003, when rates were at their lowest EVER. We couldn't have timed it better and we didn't even time it. It just happened. Suffice to say, I am NEVER leaving this house. :lol:

What did you get? 4.75%? I actually saw them go that low around that time.

They're called option ARMS and the rate is never really fixed on them. You have a "start rate" of say 1-2% and that figure is actually deferring interest monthly. It's all index driven and the key with them is the margin. So the margin plus whatever the index is currently at determines your fully ammortized payment. And that 1-2% start rate doesn't cover that. So the interest is deferred until it is time to begin making fully ammortizing payments again. The option ARM usually offers four monthly options to pay your mortgage: the start rate, the interest only rate (determined by adding the margin and the index), a 15 year am, or a 30 year am (determined again by adding the index and your margin).

dont people see that they are only putting off the inevitible and if they have difficulty paying the regular amortized payment, then they prob have no business buying that particular house?? Anything that sucks you in by offering a deferred rate up front only to be tacked on later (at God knows what kind of interest rate) is too much of a gamble? At least it is for me....
I like knowing what my payments are going to be each month.

One thing tho: the last time my taxes were assessed, my value went up so my impound amount went up, thus my monthly payment went up even tho I know my payments are actually supposed to be less (amortized) over time.
I understand it, but now Im afraid that instead of actually decreasing over time as I had hoped, my payments will actually increase as my value increases. I wasnt told about this possibility....

I bought my place in Feb/March 2003 and I paid 5.87% 30yr fixed. I consider myself pretty lucky to have gotten that good of a rate considering I had so-so FICO scores and I bought a manufactured home which apparently is penalized by adding points. yay. Oh well, at least it was under 6% which is all I cared about. Now, all I need to do is get the PMI taken off (as soon as I can pay for an appraisal that is....) and I can save about $600/yr......

^^^

Well, many people realize they will make more money five years form now than they do now. Also, many will sell that hosue and move on in two years. That up to $250,000 tax free gain is essentially free money from the govt. Why not take advantage of it. It is like working half as much and getting paid the same when the tax benefits are considered.

Also, if the value went up, then call your mtg. company and ask them to assess the value - if they will for free, it is worth the shot :shrug:

Finally, thanks Goldie for the exp.

I dont know about your pay raise, but I got a whopping 1% pay raise, and I know for a fact that that is WAY below the extra amount I pay in taxes..
I never understood the need people had for moving from house to house every two years. you cant build any equity that way and unless you are in the type of field that will guarantee you a hefty pay raise, it just isnt feasible.
All you end up doing is buying an ever more expensive house and you're gambling that you'll be able to afford it.

Im sitting tight because I can afford the house I have now....and as time goes by, I hope to be able to pay it off faster, and maybe buy a second house.
for me, its merely an investment to pass on to my kids. My house is only 3 1/2 years old so by the time I die, it wont be so bad like some of the older models Ive seen. not only that, my daughter and son in law can have it hauled off and build a stick home here. I own my own land which is a plus. so Im not complaining.

I wanted to post this picture and dont have enuff room in my siggy so here goes:

I had one client who was a first time homebuyer at the age of almost 60. She wanted the tax break from owning a home but wanted the lowest payment possible. She insisted on doing the option ARM even though I was very careful in explaining to her what the pitfalls were. She told me that she didn't care because when she died, she didn't have anyone to leave the house to anyway. I thought that was kind of sad. She's really a nice lady.

The tax assesment is something that is controlled by the city/county. So as a loan officer, I could only speculate on what is going to happen with property taxes.
5.87% is a very good rate for manufactured/ Yes, they're viewed as a higher risk by the investors (so are condos). You're lucky to have bought it when you did. Many lenders got away from doing manufactureds later in 2003. Virtually the only way I see to buy them and obtain a decent rate now is to go FHA.

That's risky though. I think she should just leave well enough alone.

We've been in our house for 5 years & we refi'd twice in that time. Our first mortgage was an FHA gov't loan @ 8.25%! :eek: Now we're around 5% & I'm able to make a couple of extra payments every year. I'm not going ANYWHERE anytime soon. :nod:

I truly do not understand who would possibly want & benefit from an ARM. :shrug:

Investors.

I don't get it - do you mean someone who's going to flip a house? Someone who won't be staying in the home long, so they'll benefit from that low initial rate & then get out before it goes up?

thats what it looks like to me....

I suppose if you have a lot of fluid cash to work with, its a bonanza, but at some point, it seems to me that even an investor would hit a wall because if I read the signs right, housing starts are slowing and the buying boom is faltering.

The area around where I live is kinda ripe for development (which is sad because there's so much history around here from the gold rush days) but developers have all the power, they come in and buy a property and inform the local community they plan on building and it seems to me that no amount of public hearings or botched EIR's (or Negative Dec's) or conflicts between jurisdictions (county vs. city) can stop them! They just bulldoze their way across virgin lands and its a dirty shame...Im kinda turning anti-development, esp after that crappy Supreme Court farce of a decision re: eminent domain.....(not sure of the spelling, Ive seen it spelled several ways) (Kelo v. City of New London)

ah crap....I feel like poo, been sick for three days now--not fun at ALL!

Actually I did contact them, and I could get the PMI taken off if I had it reassessed (which costs about $350 in CA, which I dont have right now btw). Ive already been told by my Realtor that she'd list the place for a good 30-40k more than what I paid two years ago....thats well over the necessary 20%(is that right?) loan/value ratio I need to get the PMI taken off....so, if I had an extra $350 lying around, I'd be getting this place assessed in a hot second! I could save about $600/year if I took of the PMI!!!!!

ah well, maybe at tax refund time, I can afford it. it would be money well spent I think.....Goldie: I heard about something called an "automated valuation" (I think thats it) that youse folks in lending can do. care to fill me in? does it go by zip code? sq ft? what?

If you owned a home just about anywhere in the last ten years and flipped it every two years to take advantage of the tax benefits, you would have on average made at least $100,000 tax free and the vast majority muh much more :shrug:

As for the pay raises, many do get such raises though you do not.

Non-conventional 30 year fixed loans are not for everyone, but they have their benefits for others.

Yes. That's a possible scenario.

I personally don't have occasion to use automated valuation but basically what I think they're doing is just running comps.

who can do these and is there a fee? I am trying to avoid the high price tag if possible...

ok, Im not sure I follow you because as I understand it you must invest in something that is more expensive than what you just sold in order to take advantage of capital gains. So, assuming you did sell you place at a profit you are still required to buy something more expensive or you actually end up PAYING taxes. Thus, if you are constantly going up in price tag/mortgage payments, then it appears to me that you will likely bottom out (unless you are one of the lucky ones that get decent cost of living raises)

No, there is no req. that you buy a more expensive house than you sold - you get the $250,000 exemption per owner occupant ever two years even if do not buy another house, buy a less expensive house, etc. In fact, if you get a less expensive one in an up and coming era, all the better for you. Trust me, I have done this :cool:

Go here http://www.aicpa.org/pubs/jofa/oct2002/foran.htm for an explanation of the tax law.

This is a gift from Congress and I cannot believe it is still there.

Tax free? I thought you had to own a home three years before it's tax free... or is it just two now?

The $250,000 Fed exemption per owner occupant kicks in after two years of owning and occupying - go to that site above and it pretty much spells it out.

That's a good deal... i had my house 3 1/2 years before i sold so i wasn't sure. Depositing that fat check was nice... although selling a house can be very expensive.

These days you can get a lot of agents to cut their fees. And there are discount agencies. My ex sold his house himself, with a little advice from an agent friend. All you need is forms, and an escrow company. I guess I say that cause I have done it, but it isn't that hard. And the houses practically sell themselves.

I agree, esp. if you live in a well travelled area and can put up a FIBO (For Sale by Owner) sign. You run into trouble in a condo in a mid or high rise as those buildings in general do not allow signs. You can also advertise in the paper, but that can easily hit $1,000 in a few weeks. Also, FIBO's tend to be way out of context with the price, but that is another story.

As for closing once you have the final P&S Agreement, the buyer can dump some of their mortgage costs on the seller depending on what was agreed to in the P&S Agreement.

Can you tell I have done this a few times :laugh:

Sadly, I have never been able to do a FISBO - and thus pay the 7% when selling :mad:

Liscensed appraisers. Usually the lender chooses them, though.

FSBO is not always as easy as it sounds. You know how to read and write a contract but just imagine how badly someone could get hosed who doesn't know how to do that.
There's an old saying that you make money when you buy the house, not sell it.

Oh darlin' I have made lots on the purchase owing to a rube or too busy agent. People also do not understand the some lenders allow for greater percentages of closing costs to be assigned to the seller.