I have been tracking mortgage rates for the last few months. Its always more interesting when there are drastic changes. This week we saw some of the largest changes we have seen this year. This is of course in response to the Fannie Mae and Freddie Mac takeover. The 30 year mortgage rate dropped from 6.35 to 5.93 this week. What makes this more pronounced is that rates have been coming down the last month back on July 24th rates were at 6.63. The 15 year mortgage came down as well this week falling from 5.90 to 5.54. We did not see as much movement in adjustable rate mortgages. 5 Year arms came down to 5.87 from 5.97 last week. 1 Year arms actually increased from 5.15 to 5.21. Below we listed out the rates for the major mortgage products for the last few weeks.

September 11, 2008
30-yr 5.93 15-yr 5.54 5-yr ARM 5.87 1-yr ARM 5.21

September 4, 2008
30-yr 6.35 15-yr 5.90 5-yr ARM 5.97 1-yr ARM 5.15

August 28, 2008
30-yr 6.40 15-yr 5.93 5-yr ARM 6.03 1-yr ARM 5.33

August 21, 2008
30-yr 6.47 15-yr 6.00 5-yr ARM 5.99 1-yr ARM 5.29

August 14, 2008
30-yr 6.52 15-yr 6.07 5-yr ARM 6.02 1-yr ARM 5.18

August 7, 2008
30-yr 6.52 15-yr 6.10 5-yr ARM 6.05 1-yr ARM 5.22

So how is all of this going to be reflected in the mortgage payments one will be paying. Using our free mortgage calculator we ran the numbers on a 200k loan. We looked at what a mortgage would be this week, last week and July 24th.

September 11th
30-yr $1190.11
15-yr $1638.41
5-yr ARM $1182.43
1-yr ARM $1099.45

September 4th
30-yr $1244.47
15-yr $1676.92
5-yr ARM $1195.24
1-yr ARM $1092.05

July 24th
30-yr $1281.28
15-yr $1707.22
5-yr ARM $1219.75
1-yr ARM $1134.32

Looking at 30 Year rates we can see a pretty substantial drop. Since July 24th the payment has dropped from $1281.28 to $1190.11 (a drop of 7%). Additionally, based on todays rate the 5 year arm option seems pretty pointless since it offers a very small savings compared to the 30 year rate.

So what should we expect next week? Unless banks start to get nervous again I think rates might move down a little more. There are rumors that rates are going to come down to 5.5. I think after next week the effects of the Fannie Mae and Freddie Mac will have moved into the market.

Ki works as a realtor in the Austin real estate market. He provides information on current mortgage interest rates. His website also has a free mortgage calculator