Tuesday, January 13, 2009

Fixed Mortgage Rates at Less than 4.5%

Update: Tom O points out in the comments that EconomPic is slacking with regards to timely info, which I will agree with (meant to post this last week...)

A little behind the time. Conforming fixed 30-year mortgage rates in CA for prime borrowers have been around 4.5% at a point (under 4.7 APR)for the last week or so.
Per Bloomberg:
The largest U.S. banks are starting to offer fixed home loans below 5 percent after the government began buying mortgage securities to bolster the housing market.

JPMorgan Chase & Co. is advertising 30-year mortgages as low as 4.75 percent on its Web site, Wells Fargo & Co. has an offer for 4.875 percent and Bank of America Corp. has rates at 5 percent. The offers are for borrowers with excellent credit who put 20 percent down.
Felix of Market Movers even shows a 4.375% 15-Year rate from Chase.

Looking at historical 15-year rates and using those rates to calculate monthly payments on a 15-year $200,000 mortgage, we see monthly payments down almost $250 / month. This hope is this brings in the marginal buyer.

Too soon to tell, but it does seem like a positive sign. Of course, in an environment marked by 20-50% declines in home values there are always secondary effects to worry about.