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Thread: Mortgage Rates ... Go Figure

  1. #11
    Senior Member Gerry Clinchy's Avatar
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    Just got these rates today for week of Aug. 2

    The 7-year ARM rate is 3.375% That means that the rate will remain the same for 7 years; then begin to increase annually. Usually, the ARMS cap each annual increase at 2%; and around 5% cap for the life of the loan.

    For people who would like to pay off their existing mortgage more quickly, the law rate for 7 years might be helpful to whittle the mortgage down considerably. This is also a good mortgage for people who expect to move in less than 7 years ... like medical residents or younger executives subject to frequent relocation.

    I am surprised to see the 7-year ARM so low. Usually, when interest rates are low the ARMS do not look very attractive. The 5-yr ARM rate is shown as 3.0% (also attractive). When overall interest rates are low, the "spread" between 30-yr fixed and ARMS is usually small. When rates are low, banks are betting that they will go up, so they don't want to be giving out ARMS that will lock them in too low for very long before the rates increase, sometimes considerably in a short period of time.

    When rates are high, the banks are betting that rates will decrease, and they can still make money if the ARM rate decreases.

    When interest rates are high, ARMS can be a good idea, since they adjust down as well as up. In the early 80s, when fixed rate mortgages were 13% (!!), ARMS were around 9% ... and they went down each year. The fixed rate mortgage rates pretty much topped out at around 13% ... the point at which people would not use the fixed rate mortgages. The housing market was in the dumper.

    By the early 90s, the fixed rate decreased to around 9%, the 1-yr ARM borrowers would have been down to 5%. It was a good deal as long as they picked the right point to convert to the fixed rate mortgage at a desirable rate.

    30 Year Fixed FHA Rate 4.25% 4.39%
    30 Year Fixed Conv. Rate 4.875% 5.04%
    20 Year Fixed Conv. Rate 4.625% 4.79%
    25 Year Fixed Conv. Rate 4.875% 5.04%
    15 Year Fixed Conv. Rate 4.00% 4.14%
    G.Clinchy@gmail.com
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  2. #12
    Senior Member luvmylabs23139's Avatar
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    Quote Originally Posted by kdeckels View Post
    Sounds like you're on the right side of it. When I was a loan officer (with mtg loan duties) I was familiar with people being on the wrong side of ARM's by the devious company's.
    Ugh, nobody is on the wrong side of an ARM because of a lender. They are just stupid and did not bother to read and understand their loan. NOthing devious about the company rather stupid and greedy borrower that the taxpayer should not BE FORCED to bail out.
    2 CPA's, regards
    Hihope Hiland Heathen of Perth CD, RE, CGC, TDI

  3. #13
    Senior Member luvmylabs23139's Avatar
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    Smiling at my 2.875 rate again and the fools keep offering me a 30 year fixed at 4.8 telling me it is for my own good, NOT!
    Hihope Hiland Heathen of Perth CD, RE, CGC, TDI

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