JOAN E. SOLSMAN

Mortgage rates fell this week, with the third-straight decline pushing the average for 30-year fixed-rate loans back below 5%, according to Freddie Mac’s weekly survey of mortgage rates.

Treasury yields have declined recently, and mortgage rates tend to follow the yields.

Meanwhile, the U.S. housing market remains unsteady. Wednesday, the Commerce Department reported that new home construction fell far more than expected in December, although building permits were issued at much higher-than-expected rate.

Freddie Mac chief economist Frank Nothaft noted Thursday that housing starts tend to be volatile in the winter months. And earlier this month, the National Association of Realtors reported pending sales of previously owned homes slid unexpectedly in November after 10 straight months of improvement.

The 30-year fixed-rate mortgage averaged 4.99% for the week ended Thursday, down from last week’s 5.06% average and 5.12% a year ago. Rates for 15-year fixed-rate mortgages were 4.4%, down from 4.45% and 4.8%, respectively. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.27%, down from last week’s 4.32% and 5.24% a year earlier.

One-year mortgages stood at 4.32%, down from 4.39% and 4.92%.

To obtain the rates, the 30-year fixed-rate mortgages required payment of an average 0.7 point, and the rest required an average of 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

A recent report by the CBC shows those looking for home loans are showing a preference for fixed rate mortgages. This could be due to the belief that interest rates are heading slowly upward for the next 5 years. The CBC cited data compiled by the Canadian Association of Accredited Mortgage Professionals which showed 86% of borrowers taking out mortgages in 2009 opted for fixed rates. The CAAMP studied more 40,000 mortgages issued in 2009, worth $10 billion in total, to look for lending trends. The $10 billion examined is a just a small portion of the Canadian mortgage market, it reflected borrowing by first time home buyers, the borrowers CAAMP deemed to be most vulnerable to rate fluctuations.

Will 2010 be the year that more borrowers manage to take advantage of rock bottom interest rates? We look at how to find the best mortgage for the year ahead.

Savings have been squeezed, wages have been frozen, jobs have been lost, energy bills are rising, and tax-increases loom large on the horizon.

Makes depressing reading, doesn’t it? By now, we’re all painfully aware of the wounds inflicted by a recession-tainted year – and that they will take some time to heal too.

But for homeowners, a glimmer of light flickers amid the gloom: rock-bottom interest rates have meant that, for some, mortgage repayments have become significantly cheaper.

Most on standard variable rates and all on tracker home loans tied to the Bank of England’s 0.5% base rate have seen monthly bills shrink, shrink… and shrink some more.

Some lucky borrowers even celebrated a 0% rate in 2009 because their existing deals had promised to undercut the base rate.

Those on fixed rate mortgages have not seen rates fall, but some canny and financially secure households have used them to their advantage.

By furiously eating away at their outstanding debt, through overpaying on their mortgages instead of ploughing earnings into poor-value savings accounts, they have substantially boosted the return on their extra cash.

But the big question for homeowners, whether you are thinking of remortgaging or moving home, is: when is the right time to grab a new deal?

Follow our simple guide to make sure you’re all set up for the New Year:

What are the options?

Essentially, there are three main types of mortgage: fixed-rate, standard variable rate (SVR) or SVR linked discounts, and trackers.

While fixed rates stay the same throughout your loan period, trackers and SVRs fluctuate up and down according to the movements of the Bank of England’s base rate. A tracker will move directly in line with base rate, an SVR is at the mercy of lender’s whims whether to raise or cut.

If borrowers sign up to a fixed rate, tracker or discount deal, then when initial deal periods come to an end, they are most likely to be automatically moved onto their bank’s standard variable rate (SVR) – and these vary considerably between providers. (This is unless you are on a lifetime deal and then your rate will stay the same for as long as you have the mortgage.)

Typically advice has been that if you’re on an SVR, or your fixed mortgage term expires soon, then searching for a new deal was the best option. But as the base rate was slashed down to 0.5%, many SVRs fell too and with new mortgage criteria tough, sticking on an SVR may be the best option. Right now, SVRs range from between 2.5% to 6%.

A vast majority of homeowners currently on their banks’ cut-price standard variable rate may be temporarily better off staying where they are and reviewing the state of play in a few months’ time. But some should move fast to get a better deal.

BM says: ‘Customers of any bank with an SVR of around 2.5% – for example, Cheltenham & Gloucester or Nationwide – should stay put because no lender will be able to beat that in the current climate. However if your bank’s SVR is nearer 5%, then there are better products out there, particularly in the tracker market.’

All shrewd borrowers should take advantage of the system by shopping around. An average SVR may not seem too bad now, but will shoot up as soon as the Bank of England raises the base rate. So securing a good tracker or a decent fixed-rate loan may be a better choice in the long run.

For free independent mortgage advice contact BM

BM are situated near to Derby, Leicester, and Nottingham.

There are many important decisions that have to be made when it comes time to buy a new home. Beyond the obvious things like actually finding a suitable place and narrowing down a reasonable budget, financing is one of the biggest hurdles that most people must overcome. Indeed, the type of mortgage that you choose can have a tremendous impact on how easy – or not so easy – becoming a homeowner will ultimately be. There are many options out there that a qualified mortgage broker Brisbane can explain to you, but one of the biggest choices you’ll have to make will be between a fixed rate and a variable rate. Learn more about each – and their pluses and minuses – by reading on below.

Fixed Rate Mortgages

As most mortgage brokers Brisbane will attest, fixed rate mortgages are generally the most appealing option to the broadest array of prospective homeowners. The biggest reason for this, of course, is the fact that they come with an easy-to-budget, unchanging monthly mortgage payment. Since the interest rate on such a loan doesn’t fluctuate, homeowners can plan ahead with more accuracy. Also, should rates increase a fixed rate mortgage will protect you. On the other hand, if rates dip you will be stuck paying in at a higher rate. Often, fixed rates only apply for a certain period of time; talk to your broker to discuss the merits of these loans.

Variable Rate Mortgages

Market forces and the Reserve Bank of Australia each month determine the interest rate for variable mortgages. Therefore, the rate can fluctuate dramatically and in ways that are both positive and negative in terms of your monthly mortgage payment. Some people prefer variable rate mortgages because they are more flexible when it comes to making additional repayments. On the other hand, if rates rise a lot many people find themselves in dire straits in terms of affording their monthly payment. Of course, if rates fall then you enjoy lower payments.

Discuss Your Options

There are a number of different factors that will determine whether you are most suited to a fixed rate mortgage or a variable mortgage rate. People with a lot of "wiggle room" financially – i.e., those who don’t need to adhere to an extremely strict budget – often do much better with variable rate loans. For those who must rely on consistent monthly repayments are generally advised to take up the fixed mortgage option. Ultimately, the decision will be entirely up to you. For best results, discuss the pros and cons of both loans with your mortgage broker, who will look at your overall financial picture and advise you on the best course of action.

Interest rates for 30-year and 15-year fixed-rate mortgages have fallen for five consecutive weeks, and this week both set a new all-time record low, Freddie Mac reported Thursday.

It’s been a good year for borrowers when it comes to the costs associated with purchasing or refinancing a home. Freddie Mac’s chief economist, Frank Nothaft, explained that interest rates on 30-year and 15-year mortgages through all of 2009 have averaged a full percentage point below their respective average in 2008.

Freddie Mac’s latest market survey shows that for the week ending December 3, rates for 30-year fixed-rate mortgages (FRM) averaged 4.71 percent (0.7 point). That’s down from last week’s average of 4.78 percent, and significantly lower than the 5.53 percent rate of a year ago.

Freddie Mac said the 30-year rate has never been as low as it is now, since the GSE began its weekly survey in 1971.

“Low mortgage rates and the cumulative decline in house prices have contributed to an extremely affordable housing market and helped spur home sales this year,” Nothaft said.

He pointed to statistics from the Census Bureau and National Association of Realtors (NAR), which showed that total new and existing home sales in October were 36 percent higher than their January low.

NAR also recently reported that pending existing-home sales rose for the ninth straight month in October, representing the longest consecutive gain since the series began in 2001. Seven of those months were the most affordable on record dating back to 1971, Nothaft noted.

Source: Carrie Bay- DSNews.com


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