Mortgage Rates Fall Again

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 mortgage 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 fluctuations 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 occurring 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 down payments. 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