«
»

Tuesday, December 2nd, 2008 at 10:29 AM

Lower Mortgage Rates

CR noted today that the 10-year treasuries are yielding 2.70%, lower than they were in 1962! 

Mortgages rates typically follow, and conforming rates are now in the low-5% range.

How do today’s 30-year fixed rates compare to a few months ago?

Loan Amount Old Rate/Payment Today’s Rate/Payment Difference
$350,000 FHA 6.50% / $2,212 5.375% / $1,960 $252/mo.
$417,000 6.25% / $2,567 5.25% / $2,302 $265/mo.
$700,000 7.50% / $4,894 6.00% / $4,197 $697/mo.
$850,000 7.50% / $5,943 6.00% / $5,096 $847/mo.

These are P&I payments, and today’s rates include paying one point (1% of loan amount).

If you didn’t mind having the same payment, and wondered how much more buying power the lower rates give you, here are the loan amounts using the same payments – using today’s rate:

Payment Old Loan Amount New Loan Amount Difference
$2,212
$350,000
$395,000
 +$45,000
$2,567
$417,000
$465,000
 +$48,000
$4,894
$700,000
$816,000
 +$116,000
$5,943
$850,000
$991,000
 +$141,000

The $465,000 kicks you into the super-conforming category, which is 1/8% higher in fee
(cost is 1.125%, instead of 1%).

These lower rates are about the only thing besides lower prices that could ignite the market. If you’re able to go a little higher, price-wise, it should expose you to a few more properties, ones that are hopefully better than the previous lower-priced listings you’ve been considering.

Now if we could only get the sellers to reduce their price too!

Posted on Tuesday, December 2nd, 2008 at 10:29 AM in Interest Rates/Loan Limits | 11 Comments » | Print Print You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Reader Comments: 11 Responses

  1. Those rates make it a bit more tempting to jump back into the market but I keep my buy/rent excel spreadsheet calculator handy for these occasions. Entering a resonable number (-5%) for expected appreciation for a couple of years makes it a rent answer by a long shot for my target zip code (92024). If sellers come down another 20-25% I’ll start to get serious about finding the right home.

    JE | December 2nd, 2008 at 10:58 am

  2. Mortgages rates typically follow, and conforming rates are now in the low-5% range.

    No, Mortgages rates typically resemble 10 year treasuries, and conforming rates are now 5.4-6.8%. See? Where’s my 3% re-fi?

    Rob Dawg | December 2nd, 2008 at 11:33 am

  3. These rates make a big difference. Prices still need to decline for me until a stable point, because whatever I buy I plan to trade-up in 5-15 years. So if the price is too high and depreciates, I’ve lost equity and thereby the down payment I need to upgrade. I don’t mind a 5% loss, but potential 15% loss would make a condo unreasonable for me at any interest rate – I’d be trapped inside my affordable condo with no equity. =)

    By the time next year comes around, we’ll have more info to asess. Again I don’t intend to time the bottom exactly, but the current drops are so rapid you’re essentially paying double rent (once for the mortgage, once for the depreciation, plus some principal)

    BDiego | December 2nd, 2008 at 11:35 am

  4. JE,

    I don’t know if you’re going to see sellers coming down another 20-25%. The huge glut of over-priced properties looks like it’s here to stay.

    I’d encourage you to let me make lowball offers on your behalf, and see if we can’t pick one off at a 20-25% discount. You don’t need all the sellers to dump, just one. :)

    Jim the Realtor | December 2nd, 2008 at 11:52 am

  5. The war on savers continues…

    greenlander | December 2nd, 2008 at 4:14 pm

  6. Wouldn’t be enough to lure me into the market, but I think it may be time for another refi.

    GeneK | December 2nd, 2008 at 6:13 pm

  7. Where can you find a jumbo loan for 6%?

    The Blur | December 2nd, 2008 at 6:31 pm

  8. But what happens when the govt stops subsidizing the mortgage industry (if they ever stop)? Even 6.5%-7% is very low, based on historical trends. Can we really expect wages to take off any time in the near future?

    Since property taxes are tied to the purchase price, the buyer would be better off waiting for lower prices.

    The problem isn’t high rates…they’ve been too low for too long. The problem is high prices. The Fed and Treasury can’t prop up the housing market indefinitely unless we all accept a dollar that is worth a fraction of its current value. That’s a whole ‘nother bucket of worms…

    CA renter | December 2nd, 2008 at 11:07 pm

  9. Jumbo 30-year fixed at 6%…really? Not ‘conforming jumbo’ but nonconforming jumbo, loans of $850,000? Where are you quoting these rates from, because that’s not what I see on major lender sites?

    Thanks

    Jon | December 3rd, 2008 at 8:41 am

  10. Pimco’s Bill Gross sees rates going as low as 4.5% within the next year. See front page story at cnbc.com (link cut and paste challenges this morning for me).

    Would be great time to get a low ball offer accepted and then re-finance even lower in 12 months. Of course, you lose the “get out of debt free” card once you re-finance (losing the non-recourse aspect of loan), but long term buyers would benefit if rates continue to drop as the world’s largest bond investor predicts.

    FuturesWatcher | December 3rd, 2008 at 8:48 am

  11. Jon,

    Would it surprise you if I said the whole game is rigged?

    They’re not going to advertise the low rates, you have to know where to get them. Plus the different lenders go in and out of the market, depending on their work flow and desire to to hang onto jumbo loans, instead of selling them, because there’s no secondary market now.

    Yesterday’s quote was from Countrywide, and if you want to get a loan like that call Carl Streicher at (760) 268-4344.

    Jim the Realtor | December 3rd, 2008 at 8:54 am

Post a new comment