The graph below represents the drop in 30 year fixed mortgage rates since April 21, 2010. Incredible. But it's also a reflection of our lagging economy and global fears of the world's economic stability.

Adjustable Mortgage Rates Down As Well – Good News!

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 4.93 percent with an average 0.7 point for the week ending May 13, 2010. This rate is down from last week when it averaged 5.00 percent. Last year at this time, the 30-year FRM averaged 4.86 percent. The 30-year FRM has not been lower since the week ending December 10, 2009, when it averaged 4.81 percent.

The 15-year FRM this week averaged 4.30 percent with an average 0.6 point, down from last week when it averaged 4.36 percent. A year ago at this time, the 15-year FRM averaged 4.52 percent. The 15-year FRM has not been lower since the week ending December 3, 2009 when it averaged 4.27 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.95 percent this week, with an average 0.6 point, down from last week when it averaged 3.97 percent. A year ago, the 5-year ARM averaged 4.82 percent. The 5-year ARM has not been lower since Freddie Mac started tracking the 5-year ARM in January of 2005.

My Take:

This continued suppression of mortgage rates is extremely good fortune besides the obvious opinion that lower mortgage rates are good for the real estate economy. 

A tremendous catalyst in the real estate debacle that began a couple of years ago was the rolling over of adjustable-rate mortgages.  If you consider the height of the real estate market to be the years between 2004 to 2005 when a plethora of these adjustable-rate mortgages were born, then looking at the years in which they began to adjust is not only an important history lesson but a forecaster for the future as well.  It's no coincidence that the majority of the foreclosures hit the market in 2007 to 2008 when people could no longer afford there now higher mortgage payments (3 year ARM) coupled with a downturned economy.

Fortunately the second wave of these adjustable arms (5 year ARM) is coming do now in 2010 where the adjustable rate is actually lower than the initial rate in most cases. Consider it a bullet dodged.  For many people it's just like getting a slight loan modification or refinance.  Even if it amounts to just a few hundred dollars per month, that is often just enough to keep heads above water while the economy rebounds.

Mortgage rates moved down very slightly once again this week, making this now a four week trend. The benchmark 30-year fixed-rate mortgage fell to 5.55 percent, according to the Bankrate.com national survey of large lenders.  One year ago, the mortgage index was 6.77 percent; four weeks ago, it was 5.8 percent.  The benchmark 15-year fixed-rate mortgage fell to 4.89 percent.  The benchmark 5/1 adjustable-rate mortgage fell to 4.93 percent.

North Providence is in bad financial shape.  To make up for deficits, they have approved a tax increase from $22.70 per 1000 to $25.60 per 1000.  This equals a 12.7% increase!  New tax bills are going out at the end of the month. There also may be another supplemental tax increase in January, which has not been approved yet, but more than likely will.  Total tax increase is supposed to be 17%.

Click here for current Rhode Island Municipal Tax Rates.

The volume of mortgage applications filed last week rose 10.9% from the week before, spurred by a surge  in refinancings.

Applications to refinance existing home loans rebounded 15.2% for the week ended July 3, while applications for mortgages to purchase homes also increased, up 6.7%.

Overall, the pace of mortgage filings recovered from the week ended June 26, when refinancings had weakened to their lowest level since last November.

Refinancing applications made up 48.4% of all mortgage activity, up from 46.4% the week before, while adjustable-rate mortgages accounted for 4.4%, up from 4.3%.

According to the most recent survey, 30-year fixed-rate mortgages carried an average interest rate of 5.34% last week, unchanged from the week before.

To obtain this rate, the mortgage required payment of an average 1.13 points. A point is 1% of the mortgage amount, charged as prepaid interest.

Fifteen-year fixed-rate mortgages averaged 4.83% last week, up from 4.81% the week before; the mortgage required payment of an average 1.06 points to obtain the rate.

Rates for 30-year home loans fell back this week after soaring to the highest level in seven months a week earlier.  The average rate for a 30-year fixed mortgage was 5.38 percent this week, down from 5.59 percent a week earlier.

Rates had risen for three consecutive weeks after yields on long-term government debt, which are closely tied to mortgages rates, had been climbing as investors worried that the huge surplus of government debt hitting the market could trigger inflation.

But data released Wednesday suggested that inflation remains largely in check.  Though there are signs that the troubled U.S. housing market is beginning to stabilize, higher rates could threaten or slow down any recovery, since borrowers would be able to borrow less money and might decide to hold off on their purchases.

Simply put, buyers have a certain amount of money they can afford to spend.  If interest rates shoot up, then house prices will have to fall to make up the difference.  The three-week run-up in rates started to slow home buyer demand.

Freddie Mac released the results of its Primary Mortgage Market Survey  in which the 30-year fixed-rate mortgage averaged 4.78 percent with an average 0.7 point for the week ending April 2, 2009, down from last week when it averaged 4.85 percent. Last year at this time, the 30-year averaged 5.88 percent. The 30-year has not been lower in the life of Freddie Mac’s weekly survey, which dates back to 1971 for the 30-year fixed rate mortgage.

The 15-year fixed rate this week averaged 4.52 percent with an average 0.7 point, down from last week when it averaged 4.58 percent. A year ago at this time, the 15-year averaged 5.42 percent. The 15-year  has never been lower in the life of Freddie Mac’s weekly survey, which dates back to 1991 for the 15-year fixed rate mortgage.

Freddie Mac released the results of its Primary Mortgage Market Survey in which the 30-year fixed-rate mortgage (FRM) averaged 5.10 percent for the week ending January 29, 2009, down from last week when it averaged 5.12 percent.  

Last year at this time, the 30-year FRM averaged 5.68 percent.

The 15-year FRM this week averaged 4.80 percent, unchanged last week when it averaged 4.80 percent.  A year ago at this time, the 15-year FRM averaged 5.17 percent.

Five-year  hybrid adjustable-rate mortgages (ARMs) averaged 5.27 percent this week, up from last week when it averaged 5.24 percent.  A year ago, the 5-year ARM averaged 5.32 percent. One-year Treasury-indexed ARMs averaged 4.90 percent this week, down from last week when it averaged 4.92 percent.  At this time last year, the 1-year ARM averaged 5.05 percent.

To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point, and the ARMs required payment of an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest. The Freddie Mac survey covers conforming mortgages.

The 30-year fixed-rate mortgage dropped below 6% on average this week, a seven-week low for the mortgage, according to Freddie Mac’s weekly survey, released on Wednesday.

The mortgage averaged 5.97% for the week ending Nov. 26, down from last week’s 6.04% average. The 30-year mortgage averaged 6.10% a year ago; it hasn’t been lower since Oct. 9, when it averaged 5.94%.

“Interest rates for 30-year fixed-rate mortgages fell for the fourth consecutive week as signs the overall economy is flagging lowered most interest rates market-wide,” said Frank Nothaft, Freddie Mac chief economist, in a news release. “And economic growth in the third quarter was revised downward this week, led by the first decline in consumer spending since the fourth quarter of 1991 and the largest drop since the second quarter of 1980.”

The 15-year fixed-rate mortgage averaged 5.74%, up slightly from last week’s 5.73% average. The mortgage also averaged 5.73% a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.86%, down from last week’s 5.87% average. They also averaged 5.86% a year ago. And 1-year Treasury-indexed ARMs averaged 5.18%, down from last week’s 5.29% average. The ARMs averaged 5.43% a year ago.

To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point, the 5-year ARM required an average 0.6 point and the 1-year ARM required an average 0.5 point. A point is 1% of the total mortgage amount, charged as prepaid interest.