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2011-05-12 15:41:29
Interest rates have declined for the 4th straight

Interest rates have dropped again for the fourth straight week, to it's lowest levels since early December 2010!! Rates for 30 year FHA loans are currently between 4.25% and 4.375%. This is great news for anyone seriously considering purchasing a home with a mortgage in the very near futrure. These rates are not expected to stay this low much longer and most of us local real estate professionals are surprised to see the rates this low once again. 


Here is a graph and explanation by MortgageMatch.com explaining current interest rate trends:


May 12 Interest Rates


According to the newest Freddie Mac Primary Mortgage Market Survey, long-term mortgage rates declined for the fourth consecutive week. 30-year loan rates averaged its lowest level  since the week ended Dec 9.

“Mortgage rates continued to decline this week following a mixed employment report,” Freddie Chief Economist Frank Nothaft said. Although the economy added 244,000 workers in April—the most in the last 11 months—unemployment rose to 9.0 percent from 8.8 percent in March, Nothaft added.

The average rate for 30-year fixed-rate mortgages (FRMs) dropped to 4.63 percent from the previous week, when it was 4.71 percent.

This week 15-year fixed rates averaged 3.82 percent, down from last week’s 3.89 percent average.

For 5-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs), this week averaged 3.41 percent. This is a decrease from last week’s 3.47 percent.

In addition, 1-year Treasury-indexed ARMs dropped this week to 3.11, compared to last week’s 3.14 average.


Remember that for every percentage point (1%) on a mortgage, monthly payments increase $83/month for every hundred thousand dollars that you borrow. So the difference between a 4.25% and a 5.25% interest rate on a $200,000 loan is an additional $167/month, or $2000/year, JUST IN INTEREST!!


The additional $167/month is the same as purchasing a home that is about $25,000 more expensive at current interest rates. In other words, mortgage payments would be about the same for a $225,000 mortgage at 4.25% interest as a $200,000 mortgage at 5.25% interest. 


Here is a graph which shows how much (approximately) interest rates affect monthly mortgage payments:

 

Loan Amount

Payment at 4.25% interest (2010-2011)

Payment at 5% interest (2009)

Payment at 6.25% interest (2002-2008)

Payment at 8% interest (92-02)

$100,000

$605

$650

$730

$850

$120,000

$730

$780

$875

$1,015

$150,000

$900

$975

$1,090

$1,265

$200,000

$1,200

$1,300

$1,450

$1,680

$300,000

$1800

$1950

$2,180

$2,530



If you ae ready and able to purchase a home, it is highly recommended that you consider moving forward as quickly as you can. Let me know what i can do to be of assistance.

 
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