Mortgage Rates Plummet: 6th Lowest of All Time

Rates fell for the third straight week. They hit the lowest point since May 21st and they reached the 6th lowest point in history. It will come as no shock to those that have been following rates that the 5 lower rates all occurred this year. Below are the 6 lowest rates of all time.

April 30th - 4.78
April 2nd - 4.78
April 23rd - 4.80
April 16th - 4.82
May 21st - 4.82
Nov 19th - 4.83

As we can see although it's the 6th lowest it's extremely close to the all time low of 4.78 reached in April. Falling below 4.78 at this point would be significant though. While it would not make a big difference in actual mortgage payments it would create headlines. And having a bunch of stories about historically low mortgage rates could push some buyers off the fence and help increase sales.

In addition to the 30 year rate falling the other major mortgage products fell as well this week. In fact the 15 year mortgage and the 5 year arm both hit all time lows this week. Below are rates from the weeks from Oct 22, 2009 to Nov 19, 2009. We also showed rates from April 30th, 2009 which was the all time low for the 30 year mortgage.

Nov 19, 2009
30-yr 4.83 15-yr 4.32 5-yr ARM 4.25 1-yr ARM 4.35

Nov 12, 2009
30-yr 4.91 15-yr 4.36 5-yr ARM 4.29 1-yr ARM 4.46

Nov 05, 2009
30-yr 4.98 15-yr 4.40 5-yr ARM 4.35 1-yr ARM 4.47

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Apr 30, 2009
30-yr 4.78 15-yr 4.48 5-yr ARM 4.80 1-yr ARM 4.77

So now that we have locked at rates lets look at actual mortgage payments. We took current rates and translated them into a mortgage payment for a 200k mortgage. We also did the same thing with rates from November 19th (2 weeks ago) and from April 30, 2009 (the all time low for the 30 year rate.

Nov 19
30-yr $1052.96
15-yr $1511.65
5-yr ARM $983.87
1-yr ARM $995.62

Nov 05
30-yr $1071.19
15-yr $1519.78
5-yr ARM $995.62
1-yr ARM $1009.8

Apr 30
30-yr $1046.91
15-yr $1527.94
5-yr ARM $1049.33
1-yr ARM $1045.7

So based on current mortgage rates the payment on a 200k loan would be $1052.96. What's interesting is that the payment is 1.7% less than what it was two weeks ago. On the other hand the payment based on today's rates is only 0.5% higher than what it was on April 30th when the 30 year rate hit its all time low.

So what is advice to people looking for mortgage? Although the 5 year arm is at an all time low I would avoid ARM's at this point. Looking at historical mortgage rates it would seem that most likely rates will be significantly higher in 5 years than what we are seeing currently.

Now is probably a going time to lock in a mortgage rate. With rates just barely above all time lows the chances of rates falling drastically is pretty low. On the other hand rates have a lot more room to move up.


Ki works in Central Austin. His website distributes free information on Austin Tx real estate to potential buyers. His site also has a free mortgage calculator and a interest rate widget.