Last week mortgage rates matched their all time low of 4.78. This week rates fell even further reaching a new low of 4.71. To put this in some context in terms of historical mortgage rates before the last 12 months the all time low was 5.24 which was reached in the middle of 2003. Today’s rates are a full half point below that.

Although the 30 year rate is the most significant of the 4 major mortgage products the other 3 fell as well. The 15 year mortgage hit a new all time low for the second week in a row falling from 4.29 to 4.27. The 5 year arm reached a new all time low of 4.18 last week and equaled that mark this week. The 1 year arm is the only mortgage product not currently at an all time low. It did fall from 4.35 to 4.25. Below are rates from the weeks from Nov 05, 2009 to Dec 03, 2009 along with rates from a year ago.

Dec 03, 2009
30-yr 4.71 15-yr 4.27 5-yr ARM 4.18 1-yr ARM 4.25

Nov 26, 2009
30-yr 4.78 15-yr 4.29 5-yr ARM 4.18 1-yr ARM 4.35

Nov 19, 2009
30-yr 4.83 15-yr 4.32 5-yr ARM 4.25 1-yr ARM 4.35

Nov 12, 2009
30-yr 4.91 15-yr 4.36 5-yr ARM 4.29 1-yr ARM 4.46

Nov 05, 2009
30-yr 4.98 15-yr 4.40 5-yr ARM 4.35 1-yr ARM 4.47

Jun 04, 2009
30-yr 5.29 15-yr 4.79 5-yr ARM 4.85 1-yr ARM 4.81

Dec 04, 2008
30-yr 5.53 15-yr 5.33 5-yr ARM 5.77 1-yr ARM 5.02

So what is the significant of new record lows? As we can see in the above numbers rates have been low for awhile. Rates have been below 4.85 for the last 2 weeks. That said hitting a new all time low is significant because it will generate some news and headlines, and a bunch of headlines about all time low mortgage rates could generate some buyer activity.

So with multiple mortgage products hitting all time lows which do we recommend? Although the arms have become more attractive since falling over half a point over the last 6 months the 30 year rate seems like the logical choice. With rates at all time lows it’s simply too hard to pass up locking in for a long period of time.

To see the effect of the falling rates we took today’s rates and translated them into a payment on a 200k house. We did the same thing with rates from 2 weeks ago and rates from a year ago.

Dec 03
30-yr $1038.47
15-yr $1506.58
5 ARM $975.7
1 ARM $983.87

Nov 19
30-yr $1052.96
15-yr $1511.65
5 ARM $983.87
1 ARM $995.62

Dec 04 2008
30-yr $1139.34
15-yr $1616.18
5 ARM $1169.68
1 ARM $1076.08

For a 200k loan a mortgage is 9.7% less (or $100.87 a month) cheaper today than a year ago. So what do we expect moving forward? Although we keep expecting rates to move up eventually and rates keep moving down they cannot move down much farther. It’s hard to know if rates are moving up or down over the next few weeks but the general view is that we should be seeing higher rates 3 to 4 months from now.

Ki is active in the Austin Texas real estate community. He built and grew a website, which allows buyers to search for homes in Austin. His site also has a free mortgage calculator and a mortgage rate widget.

Tags: arms, austin texas real estate, banks, economy, fannie mae, FED, freddie mac, free mortgage calculator, interest rates, loans, mortgage interest rates, mortgage rate widget, mortgage rates

Beginning October 2008 through October 2009, the U.S. Treasury Department has been bailing out U.S. banks. In efforts to undergird the economy, and stabilize the struggling institutions, over $200 billion has been paid out to over 600 mortgage lenders through the Treasury’s Capital Purchase Program.

Surprisingly, almost $71 billion has been paid back to the U.S. Treasury so far. That’s almost 36 percent of $200 billion being paid back by 41 different banks. Interestingly to note, almost 7 percent of the banks who borrowed federal money owed 36 percent of the government’s capital purchase.

Looking at the extensive list of all lenders included can make your head spin. Names like 1st Enterprise Bank, 1st FS Corp. and 1st Source Corporation start off the registry that progresses to a multitude of variations of Bancorp names, ending on Yadkin Valley Financial Corporation, York Traditions Bank and Zion Bancorporation.

The Freeport State Bank of Harper, Kansas received the lowest bailout in the amount of $301,000. It looks like CitiGroup Inc. and JP Morgan Chase & Co. of New York, along with Wells Fargo & Co. based in California, received the largest bailouts in the amount of $25 billion each. Out of the three lenders receiving the biggest bailouts, only JP Morgan Chase & Co. is noted as having paid anything back to the government. To the credit of JP Morgan Chase & Co., the group has repaid the entirety of the $25 billion borrowed.

Not surprisingly, lenders in New York State lead U.S. territory and states in the Union with $79.5 billion in bailout bucks. The ten states that top the list are:

1. New York State - $79.5 billion
2. North Carolina - $28.6
3. California - $27.6 billion
4. Pennsylvania - $9.4 billion
5. Ohio - $7.65 billion
6. Minnesota - $7 billion
7. Georgia - $6.2 billion
8. Illinois - $4.5 billion
9. Virginia - $4.2 billion
10. Connecticut - $3.8 billion

States in which lenders borrowed the least include the following bottom ten:

1. Washington, D.C. - $6 million
2. Wyoming (all in Buffalo) - $8.1 million
3. Rhode Island - $31 million
4. New Hampshire - $40.8 million
5. New Mexico - $45.5 million
6. Nebraska - $51.6 million
7. Maine - $58.4 million
8. Idaho - $81.7 million
9. Arizona - $83 million
10. North Dakota - $85.8 million

The following states and companies are in the top ten to have paid back bailout money in the amounts indicated:
1. New York State — $51.7 billion
– JP Morgan Chase & Co. - $25 billion
– Goldman Sachs Group Inc. - $10 billion
– Morgan Stanley - $10 billion
– American Express Company - $3.4 billion
– First Niagara Financial Group - $184 million
– Signature Bank - $120 million
– Alliance Financial Corporation - $27 million
– Bank of New York Melon Corp. - $3 billion
2. Minnesota - $7 billion
– U.S. Bancorp - $6.6 billion
– TCF Financial Corp. - $361 million
3. Virginia - $3.7 billion
– Capital One Financial Corp. - $3.55 billion
– First Community Bank Shares - $41.5 million
4. North Carolina - $3.15 billion
– BB&T Corp. - $3.13 billion
– Crescent Financial Corporation - $24.9 million
5. Massachusetts - $2.1 billion
– State Street Corp. - $2 billion
– Independent Bank Corp. - $78 million
– Berkshire Hills Bancorp Inc. - $40 million
6. Illinois - $1.6 billion
– Northern Trust Corp. - $1.6 billion
7. New Jersey - $397 million
– Valley National Bancorp - $300 million
– Sun Bancorp, Inc. - $89.3 million
– Somerset Hills Bancorp - $7.4 million
8. California - $248 million
v CVB Financial Corp. - $130 million
– Westamerica Bancorporation - $83.7 million
– Bank of Marin Bancorp - $28 million
– First ULB Corp. - $4.9 million
– Manhattan Bancorp - $1.7 million
9. Washington - $200 million
– Washington Federal Inc. - $200 million
10. Texas - $200 million
– Sterling Bancshares, Inc. - $125 million
– Texas Capital Banchshares, Inc. - $75 million

Don’t let the numbers fool you. Just because a bank borrowed little doesn’t necessarily mean that it is a strong institution. On the contrary, it could be a smaller bank with shallower pockets. That should be even more cause for concern if the bank has not yet repaid borrowed bailout money to the government.

On the other hand, it should be encouraging if your bank is one of the lenders who landed in the top ten list of those who repaid their debt to the government. Also encouraging is that the $150 billion government bailout of the 1980s for the savings and loan debacle served the U.S. economy well. If history repeats itself, this will set the banks on track to overcome the current U.S. economic challenges.

Ki graduated from UT, and stayed in Austin to live and work. He authored a website, which serves Austin real estate buyers. It has a feature, which includes free searches of properties in the Austin MLS. His site also has statistical information on Austin real estate and a graph which shows mortgage rate history.

Tags: austin mls, austin real estate, bailout, bankrupt, banks, government, lenders, lending, mortgage rates, real estate

Mortgage rates fell this week with three of the 4 major mortgage products hitting all time lows. The most important of the four mortgage products the 30 year rate fell to 4.78 from 4.83 equaling the previous low. The 15 year mortgage product hit 4.29 beating the previous low of 4.32 reached last week. The 5 year arm came in at 4.18 breaking the previous low of 4.25 also reached last week. The 1 year arm stayed at 4.35. Below are rates from the weeks from Oct 29, 2009 to Nov 26, 2009

Nov 26, 2009
30-yr 4.78 15-yr 4.29 5-yr ARM 4.18 1-yr ARM 4.35

Nov 19, 2009
30-yr 4.83 15-yr 4.32 5-yr ARM 4.25 1-yr ARM 4.35

Nov 12, 2009
30-yr 4.91 15-yr 4.36 5-yr ARM 4.29 1-yr ARM 4.46

Nov 05, 2009
30-yr 4.98 15-yr 4.40 5-yr ARM 4.35 1-yr ARM 4.47

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Jul 30, 2009
30-yr 5.25 15-yr 4.69 5-yr ARM 4.75 1-yr ARM 4.80

What’s interesting is that we keep waiting for mortgage rates to increase. Some have any speculated that rates could move into double digits in the next two years. But while this discussion has been occurring mortgage rates have continued to drop and reach historical lows. In addition to rates it’s interesting to look at actual mortgage payments. We took today’s rates and translated them into a payment on a 200k. We also did the same thing with rates from November 12th (2 weeks ago) and July 30th, 2009 (4 months ago).

Nov 26
30-yr $1046.91
15-yr $1508.6
5-yr ARM $975.7
1-yr ARM $995.62

Nov 12
30-yr $1062.66
15-yr $1515.71
5-yr ARM $988.56
1-yr ARM $1008.62

Jul 30
30-yr $1104.4
15-yr $1549.47
5-yr ARM $1043.29
1-yr ARM $1049.33

The payment is 5.5 percent less than what it was 6 months ago or 57.49 less a month for a 200k loan.

So what is going to happen moving forward? I have been predicting for the last several weeks that mortgage rates were going to eventually move up and they have continued to move down. But I am going to continue with the same prediction. In the short term rates might move down slightly. But in the long term there is more of a risk of mortgage rates moving up drastically. With mortgage rates sitting at historical lows there is more of a chance of rates moving up a point or two than moving down a point or two.

Although 5 year arms are at historical lows it makes more sense to look at the 30 year rate. Locking in at all time lows is simply too appealing to pass up.

In Austin, Ki organizes information on Austin Texas real estate. He writes frequently about mortgage rates. His site has multiple mortgage widgets and a mortgage calculator widget.

Tags: arms, austin texas real estate, banks, economy, fann, FED, freddie mac, interest rates, investment properties, loans, mortgage calculator widget, mortgage interest rates, mortgage rates, mortgage widgets