Mortgage Rates Jump

Mortgage rates rose substantially this week. Ever since the government stopped buying mortgage backed securities the writing had been on the wall that mortgage rates were going to increase. And the general expectation is that over the next month rates are going to continue to rise. The 30 year rate rose from 5.08 to 5.21 this week. This is the 5th week in a row where rates have risen. Although rates have been rising this week those rose as much as the last 4 weeks combined.

Looking at the other major mortgage products the 15 year rose from 4.39 to 4.52. The 5 and 1 year arms rose from 4.10 to 4.25 (5 year arm) and 4.05 to 4.14 (1 year arm). Below are rates from the weeks from Mar 11, 2010 to Apr 08, 2010. We also have rates from October 1, 2009 (6 months ago).

Apr 08, 2010
30-fixed 5.21 15-fixed 4.52 5 ARM 4.25 1 ARM 4.14
Apr 01, 2010
30-fixed 5.08 15-fixed 4.39 5 ARM 4.10 1 ARM 4.05
Mar 25, 2010
30-fixed 4.99 15-fixed 4.34 5 ARM 4.14 1 ARM 4.20
Mar 18, 2010
30-fixed 4.96 15-fixed 4.33 5 ARM 4.09 1 ARM 4.12
Mar 11, 2010
30-fixed 4.95 15-fixed 4.32 5 ARM 4.05 1 ARM 4.22
Oct 01, 2009
30-fixed 4.94 15-fixed 4.36 5 ARM 4.42 1 ARM 4.49

So in the last month the 30 year rate has risen from 4.95 to 5.21. In addition to rates it's always interesting to look at actual mortgage payments. Using our mortgage calculator we took today's mortgage rates and translated them into a payment on a 200k mortgage loan. We then did the same thing with rates from March 25th and rates from October 1st 2009.

Apr 08
30-year $1099.45
15-year $1532.03
5-year ARM $983.87
1-year ARM $971.04

Mar 25
30-year $1072.42
15-year $1513.68
5-year ARM $971.04
1-year ARM $978.03

Oct 01
30-year $1066.32
15-year $1515.71
5-year ARM $1003.88
1-year ARM $1012.18

Compared to just two weeks ago the mortgage payment on a 200k loan has risen by $27.03 a month for a rise of 2.52 percent. This is in contrast to what we have seen for months with rates staying remarkably flat. Compared to 6 months ago a mortgage payment today is 3.1 percent higher or one would pay $33.13 more a month on a 200k loan.

So what is going to happen moving forward? For the most part I doubt we are going to see rates fall. Rates are rising and the general expectation is that they are going to continue to rise over the summer. With the tax credit now might still be a good time to buy a house.

So what is our advice for people looking for a home and a mortgage? First lock in as soon as possible. According to some experts we could see rates as high as 5.5 in a week or two. So the benefits of locking in early could be substantial. In addition, it's a good idea to start checking your credit sooner rather than later to clear up any potential problems that could stand in the way of you getting a loan.


Ki works in Austin and writes updates on the mortgage market. His site has a graphical search of Austin Homes. His site also provides a mortgage rates widget along with a mortgage calculator widget.