Mortgage Rate News

For the first time ever, the 30 year fixed mortgage rate dropped below 5% last week. The 15 year rate actually rose, to 4.65%. This has many people rushing to refinance — if they can. One of the biggest problems with refinancing to the new low mortgage rate is that falling housing values have destroyed hopes by many of qualifying with an acceptable loan to value ratio. However, for those who still have equity in their homes, things are looking promising (some think that home mortgage interest rates will fall further still).

The implications of the latest low mortgage rate is discussed by Stock Trading To Go:

And even with historic rates the fact of the matter remains that until a plan can be drawn up to deal with the rising number of foreclosures no immediate housing turnaround can be seen. There is way too much excess inventory and people still feel they should hold out before taking the risk of buying a new house (like myself).

The good news though is that those with adjustable rate mortgages (ARMs) will find that when their rates re-adjust they are in the same position if not better than previous for their overall payments.

This is, of course, a very good point. If you have an ARM right now, or a home equity line of credit, chances are that you are looking at lower payments as the interest rate heads lower. However, these lower rates — while of benefit to people who are not in trouble — are unlikely to truly kick-start any buying or prevent most foreclosures. We’re past the point with indirect intervention is likely to do much good. Instead, the government may have to step in with direct help to those in danger of foreclosure for any really and lasting progress to be made in stopping the slide.

In other banking news, the U.K. has just announced another large bailout for its banks.