Boston Homes
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Mortgage rates mixed this week

BY ADRIAN D. GARCIA
BANKRATE.COM

 

Mortgage rates moved in different directions this week, but one key rate dropped. The average for a 30-year fixed-rate mortgage ticked downwards, but the average rate on a 15-year fixed advanced. The average rate on 5/1 adjustable-rate mortgages, or ARMs, the most popular type of variable rate mortgage, climbed higher.

 

Mortgage rates are constantly changing, but they continue to represent a bargain compared to rates before the Great Recession. If you’re in the market for a mortgage, it may be a great time to lock in a rate. Just make sure you’ve looked around for the best rate first.

 

The average rate you’ll pay for a 30-year fixed mortgage is 4.03 percent, a decrease of 13 basis points over the last seven days. A month ago, the average rate on a 30-year fixed mortgage was higher, at 4.42 percent.

 

At the current average rate, you’ll pay $479.15 per month in principal and interest for every $100,000 you borrow. That’s $7.54 lower, compared with last week.

 

The average 15-year fixed-mortgage rate is 3.49 percent, up 6 basis points over the last week.

 

Monthly payments on a 15-year fixed mortgage at that rate will cost around $714 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 4.02 percent, adding 12 basis points over the last week.

 

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 4.02 percent would cost about $479 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.

 

Greg McBride, senior vice president and chief financial analyst for Bankrate.com, expects rates to head up. He said, “Economic data hasn’t been universally bad, but not universally good either, so we’ll see rates rebound a bit but maintain a low ceiling. The monthly jobs report will be the next catalyst for movement.”

 

Shashank Shekhar, CEO of Arcus Lending agrees, saying, “Rates will go up. As expected, the mortgage rates have moved higher in the last couple of days after reaching the lowest levels in 14 months. Better economic news from China and stock price surge has contributed to money moving into stocks and away from bonds. When that happens, mortgage rates tend to go up.

 

“The big news this week is the employment report which can move the market either way, depending on how good or bad the report is compared to the market expectations. If the report continues its solid trend, expect the mortgage rates to take a beating. If, however, the report is disappointing, we might see a tad lower rate. My money is on the former.”

 

Jim Sahnger, a licensed loan originator at C2 Financial Corporation, said, “After hitting 14-month lows, rates popped back up a bit this week. Floating like the feather in Forrest Gump, rates can get bumped around a bit amidst the banter and data. Trade talks caused a bit of optimism for traders however, economically, numbers are still soft. Look for the jobs data to remain a bit on the light side and, when China talks sputter again, we could revisit the recent lows. If you thought about refinancing, I’d get busy as anything to the contrary of what I said could cause rates to pop up from here.”

 

Michael Becker, branch manager at Sierra Pacific Mortgage, believes rates will stay the same. He said, “Equity markets have been surging this week on better than expected manufacturing surveys out of China and the US, and on renewed hope in trade talks between China and the US. As often happens, bonds are selling off while equities rally. This is putting upward pressure on mortgage rates this week. I don’t expect a bad employment report, so I am voting for rates to be flat in the coming week.”

 

Logan Mohtashami, a senior loan officer at the AMC Lending Group, said, “Last week, I talked about how mortgage rates and the bond market hit my target low levels for the year and that the key for lower rates were either a stock market sell off or weaker global PMI data. Well, the exact opposite happened over the weekend and China’s PMI data went positive and that unleashed a bond market sell off. Today, the 10-year yield is at 2.52 percent. Until we close above 2.62 percent with follow- through selling, we’ll stay in a lower new range. However, you saw the bond market reaction to one positive global PMI data, keep an eye out on that and the stock market.”