Many of the adjustable rate mortgages have initial interest rates so low they're bordering on the ridiculous. On the 5/1 ARM, which carries a fixed rate for the first five years, some lenders are offering rates at 2.5 percent or below. On the 7/1 ARM, a number of lenders have the fixed rate for the first seven years below 3 percent. While these rates are plenty tempting for borrowers that don't imagine being in the home more than 10 years, some of these loans are now priced in such a way that rates can only go up in the future. Be very sure about your timetable or your ability to bank the savings in the meantime, as rising monthly payments would be a virtual certainty in later years.
The last time mortgage rates were above 6 percent was Nov. 2008. At the time, the average 30-year fixed rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.37 percent, the monthly payment for the same size loan would be $997.98, a difference of $243 per month for anyone refinancing now.
SURVEY RESULTS
30-year fixed: 4.37% - down from 4.41% last week (avg. points: 0.38)
15-year fixed: 3.48% - down from 3.63% last week (avg. points: 0.32)
5/1 ARM: 3.07% - down from 3.12% last week (avg. points: 0.4)
