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.
