Mortgage Rates Hold Steady Above 5 Percent

Mortgage Rates Hold Steady Above 5 Percent

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Make rates are holding steady near five percent.

The average rate for a 30-year fixed mortgage is now above five percent, pegged at 5.16 percent according to Bankrate.com’s weekly national survey announced on Thursday. This week’s rate average follows a significant jump last week to 5.23 percent, representing one of the biggest week-over-week increases seen in more than one year.[1]

Low Rates

Today’s mortgage interest rates are above the historic low rates seen in 2010, but remain well below the prevailing 6 percent rate of late 2008. As the spring home buying season heats up, first-time homeowners won’t have the $8,000 federal tax credit available — as buyers had last year — but, they’ll enjoy low mortgage rates and homes valued some 6 percent lower according to Zillow.com.[2]

The impact of steady mortgage rates and lower home prices on the economy won’t be known for a few more months. Unemployment remains exceedingly high, but dropped to 9 percent for January 2011, a 0.8 percent decrease from November 2010.[3] That number, however, is misleading as many of the long-term unemployed have simply quit looking for work.

ARMs Notes

Rates for the popular 5/1adjustable rate mortgage remain low, averaging 4.01 percent. Under this financing arrangement, the lower rate stays in place for the first five years, adjusting annually thereafter. ARMs are popular for homeowners who want to limit their expenses during the first few years of ownership, but can be a problem if the rate reset spikes. Refinancing before rate reset is an option for homeowners who qualify.

For homeowners able to swing larger monthly payments, a 15-year fixed mortgage also offers attractive rates. The Bankrate average for the week is 4.43 percent, down 0.05 percent from the previous week. Long time homeowners can also benefit from a shorter term mortgage, replacing their higher 30-year loans with a competitive 15-year mortgage.

Your Choices

If you’re shopping for new home this spring or simply want to refinance your mortgage, securing a loan sooner rather than later may yield overall savings for you.

For the home shopper, obtaining a mortgage qualification letter serves to do two things: 1), it can lock in your rate for up to 60 days, allowing you to concentrate on looking for a home and 2), you can show your qualification letter to the seller, demonstrating to her that you are ready to buy with the money already in place.

References

[1] Bankrate: Mortgage Rates Settle Down

[2] Zillow: Real Estate Market Reports

[3] Bureau of Labor Statistics: Employment Situation Summary

Adv. — Spring is a great time to tackle home improvement projects ranging from a new deck or patio to an entirely new extension on your home. Visit SayLending.com for financing options including home equity loans and new mortgages.

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Categories: Money News