Remember back in 2009, at the height of the housing bust, when the U.S. Treasury suggested lenders offer modifications with interest rates as low as 2 percent?
The 2 percent mark deal was suggested as part of a Making Home Affordable mortgage modification that would get some homeowners’ mortgage payment down to 31 percent of their household income, a percentage generally accepted as the recommended level of spending for housing.
If rates continue on their current trajectory, you won’t need government intervention.
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Some adjustable rate mortgages (ARMs) for purchases, refinancing and equity loans – for those with pristine credit and large down payments or equity up the wazoo – are already in 2 percent territory and falling.
Late last year, mortgage market monitor HSH suggested rates would be stable in the coming months, early in 2012.
The Federal Reserve said it’s going to keep its benchmark rates stable until 2014.
We think rates are going to do better than remain stable. Unless the economy exhibits greater growth than the paltry 3 percent forecast by most economists, mortgage interest rates have no where to go but down.
We don’t make a lot of predictions, but the ones we do make? Well, see for yourself.
The economy is waiting for housing to rebound.
Do the math.
Housing, including shelter itself, household operations, insurance, fuels and utilities, water, sewage and trash services and furnishings, among other expenditures, account for about 40 percent of the Consumer Price Index, an index of consumer expenditures, according to the U.S. Bureau of Labor Statistics.
Consumer spending, for better or for worse, is the juice that fuels the economy. Give consumers low interest rates and they’ll spend.
Until then, rates won’t be stable. They’ll fall as they’ve fallen in the past few months.
The Santa Clara, CA-based Erate Interest Rate Update reported average fixed rate mortgage (FRM) rates on 30-year conforming mortgages dipped to 4.13 percent the week ending Jan. 17, down from 4.15 percent a week ago, 4.19 percent at the end of 2011 and 4.95 percent a year ago.
For the week ending Jan. 17, Erate reported the lowest 30-year fixed rate mortgage (FRM) rate was 3.59 percent. The highest was 6.96 percent.
The average rate for the 15-year FRM, 3.39 percent, ticked down from 3.43 percent a week ago, 3.47 at the end of 2011 and 4.31 percent a year ago, according to Erate, a financial information publisher and interest rate tracker since 1999.
The high and low 15-year FRM rate were 6.70 percent and 2.70 percent, respectively.
Erate’s National APR (annual percentage rates) numbers are tallied from the interest rates of some 200 mortgage originators.
On Jan. 17, the average interest rate for the 5/1 adjustable rate mortgage (ARM), 3.19 percent, was unchanged from a week ago. but down from 3.20 at the end of 2011 and 3.23 a year ago. For the week, the low 5/1 ARM was 2.38 percent and the high, 3.94 percent.
The FRM rates for 15- and 30-year mortgages and the 5/1 ARM rates are all based on a $200,000 purchase loan, with an 80 percent loan-to-value ratio, for an owner-occupied, single-family residence.
Erate reported the average rate for 30-year, non-conforming jumbo loans came in at 4.60 percent, down from last week’s 4.62 percent, down from 4.72 percent at the end of 2011 and down from 5.60 percent a year ago.
Jumbo rates ranged from a low of 3.82 percent and 7.08 percent on the high end.
The jumbo averages are based on a $450,000 purchase loan with an 80 percent loan-to-value ratio for an owner-occupied, single-family residence.
On Jan. 17, the average variable rate on home equity lines of credit (HELOC) was 4.73 percent, unchanged from a week ago and up from 4.72 percent at the end of 2011, but down from 4.84 percent a year ago. The lowest HELOC rate was 2.25 percent and the high, 9 percent, both unchanged.
Likewise, the average FRM rate on 15-year home equity loans was 6.56 percent, unchanged from last week, but down from 6.59 percent at the end of 2011 and 7.02 percent a year ago. Rates on 15-year home equity loans ranged from 3.13 percent to 11.25 percent.
Home equity loan rates are based on a $50,000, 80 percent loan-to-value note.
Check the infographic below. Mouse click it to enlarge.