Category Archives: Mortgage Rates

Reduce Long-Term Loan Costs With A 15-Year Fixed Rate Mortgage

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Comparing 30-year fixed rate mortgage to 15-year fixed rate mortgages

For as low as 30-year fixed rate mortgage rates are in Pennsylvania today, 15-year fixed rate mortgage rates are even lower.

According to Freddie Mac’s weekly mortgage rate survey, the average 15-year fixed rate mortgage rate is now 3.27% nationwide with an accompanying 0.8 discount points. 1 discount point is a closing cost equal to 1 percent of your loan size.

The current 15-year fixed rate reading is just one tick above the all-time, 15-year fixed rate mortgage low of 3.26% set in October 2011.

If you’ve ever thought of “going 15”, it’s a terrific time to talk to your lender.

The primary benefit of using a 15-year fixed rate mortgage as opposed to a 30-year fixed rate one is that a 15-year fixed rate mortgage dramatically cuts the long-term interest costs of your loan. The downside is that monthly payments are relatively large.

At today’s mortgage rates, per $100,000 borrowed :

  • 15-year fixed rate mortgage : $704 principal + interest monthly
  • 30-year fixed rate mortgage : $477 principal + interest monthly

So, for homeowners opting for a 15-year fixed rate mortgage, the monthly principal + interest payments will be 48% higher as compared to a 30-year fixed rate mortgage of the same loan size. Long-term, however, because the 15-year fixed rate mortgage interest rate is lower and because it pays off in half the time of a 30-year loan, a homeowner will save $45,000 in interest costs per $100,000 borrowed.

$45,000 per $100,000 borrowed is a huge amount of savings. It’s monies that can be used for college tuition, home improvement projects, retirement savings, or anything else. 

That said, the 15-year fixed rate mortgage is not ideal for everyone.

Because it requires higher monthly payments, a 15-year fixed rate mortgage may add stress to your household budget. Furthermore, once you commit to a 15-year loan term with your lender, you can’t revert back to a 30-year loan term without a refinance and refinances can be costly.

Therefore, be sure of yourself when selecting a 15-year fixed rate loan. The rewards are great, but the risks can be, too.

Have Mortgage Rates Bottomed Out?

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Mortgage Rates Bottomed Out?

Mortgage rates have troughed. Or, so it seems.

According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average 30-year fixed rate mortgage is 4.00 percent nationwide — roughly the same rate as it’s been for 5 weeks. 

During that times, rates have ranged between 3.97 and 4.02 percent with an accompanying 0.7 discount points, plus “typical” closing costs. Closing costs vary by state and 1 discount point is equal to 1 percent of your loan size.

In other words, to get the weekly, published Freddie Mac rate, borrowers in Pennsylvania should expect to pay a complete set of fees to their respective lenders. The larger the loan, the higher the costs. “Low-fee” and “no-fee” loans are available, too — typically in exchange for a slightly rate.

A breakdown of the Freddie Mac survey shows that interest rates and discount points vary by region. Typically, states in the West Region offer the lowest rates but with the highest costs. East Region states work in reverse; rates are often highest but the accompanying points are fewest.

The most recent mortgage rate breakdown by region shows :

  • Northeast Region : 4.00% with 0.7 discount points 
  • West Region : 3.96% with 0.8 discount points
  • Southeast Region : 4.06% with 0.9 discount points
  • North Central Region : 3.97% with 0.7 discount points
  • Southwest Region : 4.04% with 0.7 discount points

What’s most notable, though, is that in all 4 regions, rates are well below their 2011 highs. Since mid-April, mortgage rates have been in descent, dropping for 5 consecutive months before reaching to their current, “rock-bottom” levels in early-November.

Since then, however, rates have idled and the forces that combined to make rates low throughout King of Prussia are subsiding. The U.S. economy is showing signs of a rebirth; the Eurozone is edging closer to solvency; and the housing market is recovering.

So, if you’ve been wondering whether now is a good time to refinance, or whether higher rates will harm home affordability, the answer is yes. Get in touch with your loan officer to review your home loan options because, looking ahead to 2012, mortgage rates look poised to rise.

What’s Ahead For Mortgage Rates This Week : December 5, 2011

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Non-farm payrolls Dec 2009 - Nov 2011Mortgage markets made little change last week for the fifth time in as many weeks.

As Wall Street watched both the Eurozone and the U.S. regain their respective footing, expectations for a new Fed-led stimulus increased, which prevented mortgage rates from rising.

According to Freddie Mac, the average 30-year fixed rate conforming mortgage rose just 2 basis points last week to 4.00% nationwide with an accompanying 0.7 discount points. 

1 discount point is equal to 1 percent of your loan size.

For every $100,000 borrowed at 4.00 percent, therefore, today’s Pennsylvania mortgage applicant should expect to pay $700 in “points”. Mortgage rates for “zero-point loans” are higher than Freddie Mac’s published, average value.

This week, with few economic releases set for release, last week’s big stories should carry over into the current one — the biggest of which was a worldwide, coordinated central bank effort to increase system liquidity.

The European Central Bank, Bank of England and U.S. Federal Reserve were joined by the central banks of Japan, Canada and Switzerland in the effort. Stock markets rallied on the news.

Another of last week’s big stories was the sharp drop in the U.S. Unemployment Rate.

After hovering near nine percent since April, the Unemployment Rate broke out of range, dropping to to 8.6% in November. This is the lowest national Unemployment Rate since March 2009, a milestone achieved via the combination of new jobs created (+192,000 in November with revisions) plus a smaller U.S. workforce.

The U.S. economy has added 1.9 million jobs in the last 14 months.

Lastly, last week’s New Home Sales and Pending Home Sales Index releases support the growing belief that the U.S. housing market is in recovery. Both reports showed strong growth for October, corroborating what home builders have been saying — the housing market is improving and buyer ranks are growing.

Home supplies are lower in many U.S. markets.

This week, rate shoppers in Collegeville should be on alert. Market momentum changes quickly, and rates are currently anchored by the expectation of new Federal Reserve stimulus. The Fed meets December 13, 2011. As that date approaches, expectations could change, causing rates to rise.

Mortgage rates remain near all-time lows. It’s a good time to lock a rate with your lender.

What’s Ahead For Mortgage Rates This Week : November 28, 2011

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Non-Farm Payrolls Nov 2009-Oct 2011Mortgage markets worsened slightly last week through a bouncy, holiday-shortened trading week. Markets were closed Thursday for Thanksgiving and re-opened only briefly Friday.

As in past weeks, though, economic, political, and financial news from the Eurozone dictated the direction of U.S. mortgage-backed bonds.

As Greece — and now Italy — have faltered, investors have sought to preserve their respective principal, moving money from unsafe assets to safe ones, a class which includes Fannie Mae- and Freddie Mac-backed mortgage bonds.

This investment pattern is known as “safe haven” buying and it’s why mortgage rates tend to improve when large economies grow unstable. Government mortgage bonds are considered among the safest securities available.

The average 30-year fixed rate mortgage is available for 3.98%, according to Freddie Mac, with borrowers expected to pay an accompanying 0.7 discount points. 1 “discount point” is a loan fee equal to 1 percent of your loan size.

“No-point loans” carry higher rates than the Freddie Mac-published figures, but come with lower closing costs.

This week, there are several reasons to expect mortgage rates to rise throughout Pennsylvania.

First, markets are speculating that the IMF will lend Italy 600 billion euro to help avert financial crisis. This move would reverse the safe haven buying that’s characterized the last few weeks of trading, thereby leading mortgage rates higher.

A second reason is that they are early reports that Black Friday shoppers out-spent analyst estimates. Consumer spending is the largest part of the U.S. economy so, if spending is up, the economy should be up, too. 

As before, this would reverse some of the safe haven buying that’s helped keep mortgage rates low.

Lastly, this week is stuffed with new data including Friday’s always-important Non-Farm Payrolls report. Wall Street expects 116,000 net new jobs created in November. If the actual figure is much higher, mortgage rates will rise.

Expect mortgage rates to be volatile this week. Your quoted mortgage rates could vary by as much as a quarter-percent from day-to-day. If you’re nervous about losing a low rate that’s been offered to you, consider locking in.

What’s Ahead For Mortgage Rates This Week : November 21, 2011

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Congressional super-committee deadline influences mortgage ratesMortgage markets went unchanged last week as Wall Street traded on new debt stress within the Eurozone, and stronger-than-expected economic data here at home.

Rates moved very little from Monday to Friday and the storyline’s not expected to change much this week for today’s rate shoppers.

According to Freddie Mac, conforming 30-year fixed rate mortgages remain priced at 4.000% with 0.7 discount points on average, where 1 discount point equals one percent of the loan size. For people who prefer “zero-point” mortgages, expect a mortgage rate above 4.000%.

By contrast, loans with 1 point or more are priced below 4.000 percent.

However, in this holiday-shortened trading week, mortgage volatility should be up, and rates may finally break from the 4.000 benchmark we’ve hovered since November 1.

What’s unclear is whether rates will rise or fall.

For 8 months, we’ve talked of how events in Greece have influenced the U.S. mortgage market and, how each time Greece moved to the precipice of default, the U.S. mortgage bond market improved, causing mortgage rates to fall.

Last week, similar default concerns emerged for Italy and Spain. This applied downward pressure on U.S. mortgage rates, but a strong retail sales report; a better-than-expected New Home Sales data; and soaring homebuilder confidence renewed talk of domestic inflation in 2012 and beyond. 

Inflation erodes the value of the U.S. dollar and leads to higher mortgage rates.

This week, we get a full set of data :

  • Monday : Existing Home Sales
  • Tuesday : FOMC Minutes; GDP; 5-Year Treasury Auction
  • Wednesday : Jobless Claims; Personal Income and Outlays; Consumer Sentiment

In addition, Wednesday marks the deadline for the congressional “super-committee” tasked with finding $1.2 trillion in federal budget savings over the next 10 years. The committee was formed in the wake of August’s downgrade of U.S. federal debt by Standard & Poors.

If Congress fails to meet its goal in time, stock markets should suffer and mortgage rates may fall.

What’s Ahead For Mortgage Rates This Week : November 14, 2011

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Italy influencing U.S. mortgage ratesAmid a dearth of new U.S. economic data, Eurozone developments led mortgage markets down in last week’s holiday-shortened trading week. Mortgage rates across Pennsylvania worsened slightly, increasing week-over-week for the first time in a month.

Freddie Mac reports the average 30-year fixed rate mortgage at 3.99% with an accompanying 0.7 discount points. Discount points are loan fees, and 1 discount point is equal to 1 percent of your loan size.

Greece has dominated mortgage market headlines since February. As the nation-state aims to reign in its national spending, it has also adopted harsh austerity measures. The combination is meant to prevent future debt defaults, but global investors remain concerned that problems in Greece may spill over into other Eurozone nations.

As those concerns have grown, U.S. mortgage markets have benefited. This is because U.S. mortgage markets are backed by the U.S. government, and investors treat the U.S. mortgage market as “safe” compared to other security-types.

Safe investments are in high demand during uncertain times, often improving in price. This pattern is known as Safe Haven Buying and it’s one reason why mortgage rates tend to fall when the economy is sagging. Mortgage rates move opposite of mortgage bond prices.

This week, U.S. economic data returns, but markets will still be watching the Eurozone. Sunday, Italy changed leadership, in part, to restore market confidence in its ability to get its debt load under control. 

Expect developments in Italy to sway U.S. mortgage rates this week. In addition, rates will respond to a rash of economic data and Fed speakers :

  • Tuesday : Producer Price Index, Retail Sales, 5 Fed speakers
  • Wednesday : Consumer Price Index, Housing Price Index, 2 Fed speakers
  • Thursday : Housing Starts, Jobless Claims, 1 Fed speaker

Mortgage rates remain near all-time lows, with not much room to drop. If you’re shopping for a mortgage rates, therefore, consider locking in. As Greece and Italy show signs of moving forward, expect Safe Haven Buying to recede, and mortgage rates to rise.

What’s Ahead For Mortgage Rates This Week : November 7, 2011

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Fed Funds Rate 2008-2011Mortgage markets improved last week as optimism for a Greek Bailout program faded, triggering a global flight-to-quality assets. Fear of a Eurozone rift outweighed positive economic remarks from the Federal Open Market Committee and an in-line U.S. jobs report.

Although the Federal Reserve said the economy had “strengthened somewhat“, a statement backed up by Friday’s Non-Farm Payrolls data which — with revisions — met analyst expectations, concern that Greece may not receive its aid caused mortgage to fall.

Conforming mortgage rates dropped throughout Pennsylvania Monday and Tuesday, pushing rates to near their lowest levels of the year. Rates remained low through Friday.

According to Freddie Mac’s weekly mortgage market survey, the average 30-year fixed rate mortgage is 4.00% nationwide, plus closing costs and an accompanying 0.7 discount points.

A “discount point” is a one-time loan fee paid at closing, where 1 discount point is equal to 1 percent of your loan size.

As an example, 1 discount point on a $300,000 home loan costs $3,000.

This week, with no new economic due for release, the fate of mortgage rates in King of Prussia again depends on what develops in Europe. If Greece cannot reach accord within its own parliament, and cannot enact the austerity measures as dictated by its aid package, mortgage rates should fall this week, too.

However, if Greece can reach agreement and move forward, it will appease investors worldwide and U.S. mortgage rates should resume rising. Likely by a lot.

Remember : The U.S. economy has shown slow, steady improvement of late and, normally, this would result in higher mortgage rates for consumers. That’s not what we’ve experienced, however. Instead, fears of a Greek debt default have dominated headlines.

As soon as markets are certain that Greece has a way forward, attention will return to the U.S. economy, and mortgage rates are expected to rise.

Therefore, float your mortgage rate with caution this week. Depending on global events, mortgage rates may rise or fall. Eliminate your interest rate risk. Lock your rate today.

What’s Ahead For Mortgage Rates This Week : October 31, 2011

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Federal Reserve meeting this weekMortgage markets moved across a wide range last week before, ultimately, finishing unchanged. The bailout of Greece both dominated headlines and dictated market direction.

It was a wild ride for rate shoppers.

Early in the week, mortgage rates spiked. Eurozone leaders expressed optimism that a deal for Greece’s solvency would be made, rhetoric to which Wall Street responded selling mortgage bonds.

When markets closed Wednesday, conforming mortgage rates in Pennsylvania were at their highest levels since September.

However, when markets opened Thursday, rates began to reverse lower. Investors deemed the details of the Greece fuzzy, and, once again, sought safety in the U.S. mortgage bond market.

As such, rates fell through Friday afternoon, closing the week precisely where they started.

This week’s market action figures to be similarly busy. In addition to Friday’s release of the October Non-Farm Payrolls data, the Federal Open Market Committee starts a 2-day meeting Tuesday.

It’s the FOMC’s 7th scheduled meeting of the year.

The FOMC is the Federal Reserve’s monetary policy-setting group. It does not set mortgage rates for citizens of Phoenixville , but it can exert an influence. For example, if the FOMC votes to increase the size of its Operation Twist, mortgage rates may respond favorably, causing rates to fall. 

Conversely, if the FOMC scales back the size of its program because of inflationary concerns or otherwise, mortgage rates should rise. 

The Federal Open Market Committee meeting ends at 2:15 PM ET Wednesday and mortgage rates are typically volatile in the hours surrounding the group’s adjournment. If you’re floating a mortgage rate or deciding whether to lock, keep this date and time in mind.

What’s Ahead For Mortgage Rates This Week : October 24, 2011

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Greece may not get its aidMortgage markets improved last week on worries that Eurozone leaders would decline to send aid to Greece. These concerns overshadowed optimism for the U.S. economy, the result of several strong data points.

Conforming rates across Pennsylvania eased, giving homeowners and rate shoppers yet another chance to nab historically-low mortgage rates. FHA mortgage rates remained low, too.

According to Freddie Mac, the average 30-year fixed rate mortgage rate is now 4.11% with 0.8 discount points. For loans with zero points, expect to pay slightly higher rates. 

Rate-shoppers and home buyers would do well to pay attention.

This week’s may be as good as mortgage rates get. Possibly forever. This is because the market conditions that helped rates stay low — a weak U.S. economy and uncertainty in Europe — are eroding.

The U.S. economy has posted strong jobs, spending, and confidence figures in the past 3 weeks and Eurozone leaders appear closing making a deal that will help Greece avoid a sovereign debt default.

Once markets no longer worry about these two events, rates are expected to surge.

Eurozone leads met all weekend and have chosen Wednesday, October 26, as a likely “decision date” for Greece. If that date holds, and if an agreement can be reached, U.S. mortgage bonds will sell-off and mortgage rates will rise.

The housing sector is set to release important news this week, too.

After last month’s increase in Housing Starts and steady Existing Home Sales report, Wall Street will watch for this week’s New Home Sales, Case-Shiller Index and Pending Home Sales Index. If momentum stays strong for housing, that, too, should pressure mortgage rates higher.

Mortgage rates remain near all-time lows. If you’ve yet to lock your mortgage rate, or are still shopping, consider that rates have more room to rise than to fall. The “safe play” is to execute a lock today.

What’s Ahead For Mortgage Rates This Week : October 17, 2011

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Mortgage bonds suffered through another tough week last week as rising optimism that Eurozone leaders will “rescue” Greece plus stronger-than-expected economic data in the U.S. led bonds lower for the second straight week.

Conforming and FHA mortgage rates in Pennsylvania moved sharply higher. After reaching an all-time low just two weeks ago, 30-year fixed mortgage rates are now at a 2-month high.

There were several big stories in the mortgage bond market last week. Each was bad for consumer mortgage rates.

The first big story was tied to Greece. As meetings continue between Eurozone leader and rhetoric heats up, it’s becoming increasingly clear that Greece will receive its next wave of debtor aid. The planned rescue of Greece is undoing the safe haven buying that characterized the mid-summer financial markets. 

With investors more willing to take risks, mortgage bonds are selling off, and rates are rising.

The next big story was the release of the Federal Reserve’s September meeting minutes. The central bank’s meeting recap showed that the Fed considered additional stimulus beyond its Operation Twist, even as inflationary pressures are increasing. Because inflation lowers the value of outstanding mortgage bonds, rates climbed post-release.

Lastly, last week we learned that the U.S. consumer will not be deterred. Retail Sales grew 1.1 percent in September — much more than Wall Street’s expectation. This, too, caused a mortgage bond sell-off and led to a late-Friday surge in rates.

Markets should open worse this morning, pressuring rates higher yet again. However, there’s plenty of data this week for which rate shoppers should be watching :

  • Tuesday : Producer Price Index; Housing Market Index
  • Wednesday : Consumer Price Index; Housing Starts
  • Thursday : Existing Home Sales

In addition, there are 8 Fed speakers this week. Each can move markets.

Despite rising rates, mortgage rates remain low nationwide. If you’ve been shopping for a rate, it’s not too late to lock in. Talk to your loan officer and make a plan to get locked, and get closed.