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Rates on 15 and 30 Year Fixed loans were pretty much stable this week. Rates on 5 and 1 year ARMs both fell. With 1 Year ARMs falling from 5.22 to 5.06. This is the lowest 1 Year Arms have been since early March. Its a little wierd considering banks are losing a lot of money on ARMs from people going into foreclosure when their ARMs reset. So one would think that banks would be discouraging people from getting 5 and 1 year ARMs. But instead with a full point difference between 30 Year Fixed and One Year Arms they are doing exactly the opposite.
June 5,2008
30-yr 6.09 15-yr 5.65 5-yr ARM 5.51 1-yr ARM 5.06
May 29,2008
30-yr 6.08 15-yr 5.66 5-yr ARM 5.62 1-yr ARM 5.22
May 22,2008
30-yr 5.98 15-yr 5.55 5-yr ARM 5.61 1-yr ARM 5.24
May 15, 2008
30-yr 6.01 15-yr 5.60 5-yr ARM 5.57 1-yr ARM 5.18
May 8, 2008
30-yr 6.05 15-yr 5.60 5-yr ARM 5.67 1-yr ARM 5.29
May 1, 2008
30-yr 6.06 15-yr 5.59 5-yr ARM 5.73 1-yr ARM 5.29
Using our mortgage calculator lets run some numbers and look at what the rates would translate into today and a month ago.
June 5th
30-yr $1210.69
15-yr $1650.11
5-yr ARM $1136.83
1-yr ARM $1080.98
May 8th, 2008
30-yr $1205.53
15-yr $1711.46
5-yr ARM $1157
1-yr ARM $1109.36
A few weeks ago I wrote about how it made sense to get a 30 Year Fixed over a 5 Year ARM because there was not a big difference in the monthly mortgage payment you would be facing . As of today that is no longer true. On a 200k loan there is a $73.86 difference in the monthly mortgage payment between a 30 Year Fixed and a 5 Year ARM. I still don't like ARM's because your mortgage payment can reset when you are not ready for it. For instance I have heard stories of people losing their jobs a week before their mortgage interest rates resets to a higher number. But with the large difference in today's rates makes it hard to ignore the cost savings one would get with a 5 Year ARM. If you consider getting an ARM I would advise saving the difference of $73.86 a month and setting that aside for when the ARM resets. If you sell before your ARM resets you can just consider that savings a bonus.
Escapeso Realty is a small independent brokerage covering Austin Texas real estate. They have a graphical Austin MLS search and a blog with market updates on Austin real estate.
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