Boston Homes
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Mortgage rates mixed again



Mortgage rates diverged this week, but one key rate tapered off. The average for a 30-year fixed-rate mortgage slid down, but the average rate on a 15-year fixed were higher. Meanwhile, the average rate on 5/1 adjustable-rate mortgages floated higher.


Mortgage rates are in a constant state of flux, but they remain low by historical standards. If you’re in the market for a mortgage, it could be a great time to lock in a rate. Just make sure you’ve looked around for the best rate first.


The average 30-year fixed-mortgage rate is 4.35 percent, a decrease of 16 basis points over the last week. A month ago, the average rate on a 30-year fixed mortgage was higher, at 4.54 percent.


At the current average rate, you’ll pay a combined $497.81 per month in principal and interest for every $100,000 you borrow. That represents a decline of $9.47 over what it would have been last week.


The average 15-year fixed-mortgage rate is 3.71 percent, up 1 basis point over the last seven days.


Monthly payments on a 15-year fixed mortgage at that rate will cost around $725 per $100,000 borrowed. That’s clearly much higher than the monthly payment would be on a 30-year mortgage at that rate, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much more rapidly.


The average rate on a 5/1 ARM is 3.98 percent, rising 7 basis points over the last seven days.


These types of loans are best for those who expect to sell or refinance before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.


Monthly payments on a 5/1 ARM at 3.98 percent would cost about $476 for each $100,000 borrowed over the initial five years, but could ratchet higher by hundreds of dollars afterward, depending on the loan’s terms.


Half of the financial experts believe rates will be heading up. Michael Becker, a branch manager at Sierra Pacific Mortgage, said, “The recent rally or dip in mortgage rates ended abruptly last Friday with the release of the employment report. The headline number was much higher than expected and this helped alleviate some of the concern that was driving rates lower, namely that the economy was slowing down dramatically.


“Fed Chairman Jay Powell made comments that the markets took as dovish, which leads to a risk on rally that has benefited equities to the detriment of bonds. Looking forward, this risk on rally may have a little further to go, and bonds should suffer sending mortgage rates higher in the coming week.”


Shashank Shekhar, CEO of Arcus Lending, agrees, saying, “Mortgage Rates will go up. It’s been a very volatile start to the year for mortgage rates. After dipping to about a nine-month low, the rates have gone up in the last three days. Rising 10-year treasury yields and stock-market favoring comments from Fed officials have been the main contributor. Both these factors may extend into the next week. There is also talk of positive momentum in the US-China trade talks, which is another negative for the mortgage rates. Expect the mortgage rates to inch higher in the short-term.”


Dick Lepre, a senior loan officer for RPM Mortgage, believes the opposition is true. He said, “The techs are bullish (higher prices, lower yields) which should drive Treasury yields and mortgage rates down slightly in the coming week. The only domestic uncertainty is the partial shutdown.”


Logan Mohtashami, a senior loan officer with AMC Lending Group, said, “Rates will stay the same. There was some very crucial action last week. Like I talked about before, we needed to see a close below 2.62 percent but, more importantly, we needed to see follow-through action to get a clean break on yields but, instead, we got the exact opposite.


“The 10-year yield closed at 2.55 percent then the good jobs numbers reversed that action and yields shot up to 2.67 percent, currently at 2.72 percent today. We have a clear short-term range between 2.55 percent to 2.82 percent right now, keep an eye out on those levels but for rates to go down we really need to see weaker PMI data here in the U.S., because inflation expectations have stopped going down due to the stabilizing of oil prices.”


Mortgage planner Jim Sahnger of C2 Financial Corporation said, “After falling to levels we hadn’t seen since spring, rates popped up a bit over the last week. Bonds and mortgage rates love uncertainty and the markets had been flooded with it and for the short term seem a little more predictable. We saw a strong jobs report last week and with lots of jobs yet to be filled, the economy should continue to do well even if people aren’t flocking to new iPhones. For the next week though, look for rates to remain relatively stable.”