Mortgages: Interest Rates Retreat
During the past week mortgage interest rates moved visibly lower. Freddie Mac says the 30-year fixed-rate mortgage (FRM) averaged 5.12 percent with an average 0.7 point for the week ending August 20, 2009, down from last week when it averaged 5.29 percent. Last year at this time, the 30-year FRM averaged 6.47 percent.
Today’s interest levels are remarkably low, suggesting a lot of capital and relatively little demand. Being down 1.35 percent from a year ago means substantial savings when compared with the old rate.
For instance, if you want to finance $250,000 over 30 years at 6.47 percent your monthly cost for principal and interest will be $1,575.24. Lower the rate to 5.12 percent and the monthly bill will drop to $1360.45. That’s a savings of $214.19 a month or $2,577.28 per year.
Freddie Mac also reports that:
___The 15-year FRM this week averaged 4.56 percent with an average 0.7 point, down from last week when it averaged 4.68 percent. A year ago at this time, the 15-year FRM averaged 6.00 percent.
___ Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.57 percent this week, with an average 0.6 point, down from last week when it averaged 4.75 percent. A year ago, the 5-year ARM averaged 5.99 percent.
___ One-year Treasury-indexed ARMs averaged 4.69 percent this week with an average 0.5 point, down from last week when it averaged 4.72 percent. At this time last year, the 1-year ARM averaged 5.29 percent.
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