Mortgage Trends This Week: Jan. 18


Among the back-and-forth volley over whether the economy is getting better or getting worse, one relevant fact is often overlooked — mortgage borrowers can still get a very good deal these days.

While the days of the 4.75% mortgage interest rate are gone (although some of the more aggressive lenders may still have such a deal on the table), home mortgage borrowers with good credit (a credit score of 740 or better) can still count on interest rates between 4.875% and 5.125%.

But the consensus among rate watchers seems to be that if you are in the market for a home loan, now is the time to act. With the Federal Reserve getting out of the mortgage-backed securities market in March, and some signs of an economic recovery becoming visible, particularly in the housing market and on the consumer spending front, low mortgage rates won’t be around forever.

Consequently, credit-worthy mortgage shoppers would be wise to lock in a low rate now, rather than gamble that rates will remain low well into 2010. That’s especially true for the millions of borrowers who opted for adjustable-rate mortgages in 2005, 2006 and 2007. Many of those loans are set to reset this year, with interest rates expected to rise sharply. For those borrowers, low refinancing rates are still available.

That’s the big picture which, this week at least, doesn’t square with the conventional wisdom that sees home mortgage rates rising over the long haul.

This week, mortgage rates are down again, as angst over the economic recovery continues, and renewed interest over whether President Obama’s health care plan will finally pass. Standing in the way is that rarest of sights — a potential U.S. Senator from Massachusetts with an “R” next to his name. If state senator Scott Brown beats the Democratic candidate, Martha Coakley, in a special U.S. Senate election, Scott has already said he would vote against the health care bill. Scott’s vote would tip the Senate balance back to the key “41st” Republican vote that could prevent health care from moving forward in the Senate.

The’s Jim Cramer has already come out and predicted that a Brown win would propel stocks forward.

"I think investors who are nervous about the dictatorship of the Pelosi proletariat will feel at ease, and we could have a gigantic rally off a Coakley loss and a Brown win," said Cramer on Friday's Mad Money. "It will be a signal that a more pro-business, less pro-labor government could be in front of us."

A stronger stock market should help propel interest rates upward, as more investors flee the safe heaven of the fixed-income sector for the higher-risk, but higher-reward stock market — especially in key sectors like oil and energy, banks and health care stocks (all should rise, according to Cramer, with a Brown victory).

So that’s the mortgage rate landscape this week. Just so we fill in all the blanks, here are the mortgage numbers from last week, as measured by the BankingMyWay Weekly Mortgage Rate Tracker:

Loan Type               This Week        Last Week

  • One-Year ARM         4.53%            4.82%
  • Three-Year ARM      4.52%            4.57%
  • Five-Year ARM         4.40%            4.61%
  • 15-Year Mortgage   4.58%            4.69%
  • 30-Year Mortgage   5.14%            5.26%

To find the best mortgage rates available, visit BankingMyWay’s Mortgage Rate Search. You won’t find rate deals lower anywhere else.

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