Sarah Sentor writes:
Though we would have hoped otherwise, the first quarter of 2012 did not bring any stability to the fluctuating interest rates of the real estate market. The mortgage interest rate actually dropped to an all time low as the economy continues to falter and, the Federal Reserve has yet to taken any concrete action.
The current economy is showing more signs of decline than growth and, is a clear indication that a hope for a future increase in economic progression is all one can expect anytime soon. Though the decline in interest rates is only a point or so lower than before, that it fell at all is what is disappointing to investors.
The low interest rates are helping household finances stabilize but, there is only so much they can do.
Mortgage Trackers on Mortgage Interest Rates
Fixed Rate Mortgage: According to finance companies like Freddie Mac, long term interest rates [fixed rate mortgages or FRM’s] have remained below 4% in the first quarter of the year. Though there are predictions of a slight rise after May the mixed data coming in stops anyone from giving a firm statement either way.
Adjustable Rate Mortgages: Short term interest rates [adjustable rate mortgages or ARM’s] are influenced by the Federal Funds and, those home owners who have ARM’s have seen rising rates. This means, if consumers at this time, decide to refinance their mortgage they may be able to save some money in the long run.
Difference between ARM’s and FRM’s: As noted above the second quarter of the year 2012 started with a drop in rates; so that the rates fluctuated between 4-5%; ending at lower than 4%. Thus, the difference between ARM’s and FRM’s became quite narrow. The consumers with a short term mortgage of less than 10 years thus saw their ARM at times equal to the FRM.
This suggests if the consumers who intend to keep their mortgage for more than 3-5 years became proactive and, had their ARM refinanced to a FRM they would avoid a spike in their rate, when the ARM rises. According to the Federal Reserve this could happen as early as the end of May.
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