Mortgage rates slide down

BY ADRIAN D. GARCIA/BANKRATE.COM

Several closely watched mortgage rates ticked downward this week. The average rates on 30-year fixed and 15-year fixed mortgages both slid down. The average rate on 5/1 adjustable-rate mortgages, meanwhile, also were down.

Mortgage rates are in a constant state of flux, but they have remained in a historically low range for quite some time. If you’re in the market for a mortgage, it may make sense to lock if you see a rate you like - just don’t do so without shopping around first.

The average rate for the benchmark 30-year fixed mortgage is 3.77 percent, down 9 basis points from a week ago. A month ago, the average rate on a 30-year fixed mortgage was higher, at 3.82 percent.

At the current average rate, you’ll pay a combined $464.25 per month in principal and interest for every $100,000 you borrow. That’s $5.13 lower, compared with last week.

The average 15-year fixed-mortgage rate is 3.10 percent, down 11 basis points since the same time last week.

Monthly payments on a 15-year fixed mortgage at that rate will cost around $695 per $100,000 borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, but it comes with some big advantages: You’ll come out several thousand dollars ahead 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 3.83 percent, ticking down 12 basis points over the last 7 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 3.83 percent would cost about $468 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, a senior vice president and chief financial analyst at Bankrate.com, said, “The Fed left the door open to additional rate cuts, but didn’t commit to it. With the positive tone of recent economic data, skepticism about the Fed cutting more will grow and mortgage rates will rebound a bit.”

Dick Lepre, a senior loan officer with RPM Mortgage, added, “The techs don’t much care what the FOMC does. In the coming week, it looks as if the daily and weekly techs will become bullish, driving down both Treasury yields and mortgage rates. The week after the one coming may see further improvements in rates.”

Michael Becker, a branch manager at Sierra Pacific Mortgage, said, “As expected, the Federal Reserve cut its overnight lending rate by a quarter-point. This move was expected by markets. The Fed cited ‘implications of global developments for the economic outlook as well as muted inflation pressures’ as reasons for the rate cut. The Fed also decided to end the reduction or sale of bonds it has been holding on its balance sheet two months earlier than previously expected. This move will reduce the amount of Treasuries available on the open market and should be supportive of lower rates.”

C2 Financial Corportation mortgage planner Jim Sahnger said, “Mortgage rates will remain unchanged. The Fed answered the question of the month in that they cut the fed funds rate a quarter point. In his statement following the cut, Chair Powell indicated that any further rate cuts would be data dependent and that the decision to cut now was based more on global concerns than domestic performance. Interest rates have remained in a tight range for the last several weeks and they should continue to do so over the next week.”