Mortgage Rates Fall For the Fourth Week in a Row

The 30 year mortgage rate fell from 5.32 to 5.20 this week. This marks the fourth week in a row where the 30 year rate has fallen. The rate is not at the all time lows we saw earlier this year. To put it in perspective that 30 year mortgage rate is currently 5.20 and the most recent high was 5.59 (on June 18th, 2009) and the all time low was 4.78 (on April 30th 2009). So mortgage rates are down but not back to their all time lows. Historically though rates are pretty low. In fact rates today are lower than anything we saw before 2009.

The other three major mortgage products fell as well. The 15 year rate dropped from 4.77 to 4.69, the 5 year arm dropped from 4.88 to 4.82 and the 1 year arm dropped from 4.94 to 4.82. I tend to concentrate on the 30 year rate. The other 3 major mortgage products are less important today because they remain relatively close to the 30 year rate. And with rates so low it doesn't really make sense to get a slightly lower rate and only be locked in for 1 to 5 years instead of paying a slight premium to lock in for 30 years. Below are rates for the major mortgage products for the last few weeks and for December 31, 2008 (6 months ago).

Jul 09, 2009
30-yr 5.20 15-yr 4.69 5-yr ARM 4.82 1-yr ARM 4.82

Jul 02, 2009
30-yr 5.32 15-yr 4.77 5-yr ARM 4.88 1-yr ARM 4.94

Jun 25, 2009
30-yr 5.42 15-yr 4.87 5-yr ARM 4.99 1-yr ARM 4.93

Jun 18, 2009
30-yr 5.38 15-yr 4.89 5-yr ARM 4.97 1-yr ARM 4.95

Jun 11, 2009
30-yr 5.59 15-yr 5.06 5-yr ARM 5.17 1-yr ARM 5.04

Dec 31, 2008
30-yr 5.10 15-yr 4.83 5-yr ARM 5.57 1-yr ARM 4.85

Mortgage rates are important but it's also always good to look at actual mortgage payments. Using a mortgage calculator we took today's rates and translated them into a mortgage payment on a 200k loan. We also did the same thing with rates from July 9th (last week) and from December 31 (6 months ago).

Jul 09
30-yr $1098.22
15-yr $1549.47
5-yr ARM $1051.74
1-yr ARM $1051.74

Jul 02
30-yr $1113.09
15-yr $1557.72
5-yr ARM $1059.02
1-yr ARM $1066.32

Dec 31
30-yr $1085.89
15-yr $1563.93
5-yr ARM $1144.37
1-yr ARM $1055.38

On a 200k house a mortgage payment is slightly higher ($12.32 or 1.13 percent) than it would have been 6 months ago. It's interesting that people perceived rates to have been much lower back then. In December rates were at historic lows. But now, since rates bottomed out in April, people think rates are higher since they compare to the extraordinary low rates of April.

So why are rates dropping? There are a number of different factors but the economy seems to be weakening in the last few weeks. In fact the Dow Jones Industrial average hit its recent peak (8799) on June 12th and has fallen since then. The 30 year mortgage rate hit its peak around the same time June 11th and has fallen since then. It's hard to know what will happen in the next few months but once the economy recovers it's expected that mortgage rates will rise.

Ki lives in Austin Texas. He runs a site about the real estate market in Austin Texas http://www.escapesomewhere.com/ He also provides free mortgage rate widgets and mortgage calculator html.