August 17th, 2009 — Mortgage Rates, Mortgage Refinancing
According to a recent announcement by Freddie Mac, during the second quarter of 2009, refinancing borrowers overwhelmingly chose fixed-rate loans, despite of whether their original loan was an adjustable-rate mortgage (ARM) or fixed.
99% of major borrowers whose original loan was ARM now selected a new conforming fixed-rate mortgage. 30-year fixed-rate mortgages tended to be the preferred new product, 15-year fixed-rate mortgages gained favor among refinancers, with roughly a 2 percentage point increase in the proportion choosing this product for original ARM borrowers and nearly a 4 percentage point increase among original fixed-rate borrowers.
Both refinancing borrowers and families buying homes are getting away from ARMs in the current environment. During this period, the 5/1 hybrid ARMs carried an average rate of 4.9 percent while 30-year fixed mortgage rates were only at 5.0 percent on average. The small benefit from the lower rate is not enticing enough to cover the risk that rates will rise in the future from these historic lows.
These estimates come from a sample of properties on which Freddie Mac has funded at least two successive loans and the latest loan is for refinance rather than for home purchase.
Read more about the latest mortgage loan modification trends here.
August 12th, 2009 — Mortgage Rates
30-year fixed mortgage rates increased to 5.38% last week. Before this it was 5.17% during the last week and 5.36% two weeks ago. Mortgage Bankers Association’s reported this fluctuation in their weekly survey of mortgage applications.
The index that measures new mortgage purchases rose by 1.1%, the third modest gain in the last month. Refinance activity returned to around 52% of all mortgage applications.
More borrowers turned to adjustable-rate mortgages as rates have ticked up. ARMs accounted for 5.8% of all mortgage originations last week, up from 5.4% in the previous week and from lows of 3% when mortgage rates dropped below 5% in April and May.
June 11th, 2009 — Mortgage Loans
A fixed loan rate remains unchanged throughout the life of mortgage. The payments you make remain the same every month. This helps in making you organize your budget accordingly, giving you less worries. This loan is the safest kind of mortgage loans. A fixed rate loan involves the following:
- 30 Year Fixed Rate Mortgages (360 Installments)
- 15 Year Fixed Rate Mortgages (180 Installments)
- Biweekly Mortgages
- Convertible Mortgages
The traditional fixed loan rate may still be the best mortgage for your situation. One benefit of fixed loans is that you have to pay lower monthly payments, while providing for an unchanging monthly payment schedule. Many lenders may also offer 25, 20, to about 40 year term mortgages. But this can end you up paying more interest rate than usual.
