The Labor Day weekend was kind to home mortgage borrowers, with interest rates sliding back in key fixed-rate and at least one variable-rate categories, as measured by the BankingMyWay Mortgage Rate Tracker.
Thirty-year fixed-rate mortgages certainly left the light on for borrowers, with rates falling to 5.24% from 5.37%. Fifteen-year fixed-rate mortgages slid as well, to 4.73% from 4.86%. One-year adjustable-rate mortgages fell back as well, to 4.31% from 4.49%.
Despite rising enthusiasm for the economy, especially the Federal Reserve’s estimation that the recession will end this quarter, rates fell anyway. Perhaps mortgage rates are taking their cue from stock market investors, many of who believe that the market is in for a correction in September after a huge run-up in 2009.
The Dow Jones Industrial Average is up 47% from its 52-week low since March – a historic rise by any measure. Banks, the biggest lenders of mortgages, have enjoyed the best performance, with the sector up 150% during the same time period.
But consumers remain skeptical of an economic recovery, and the job numbers haven’t offered much encouragement, with U.S. employment numbers off by 216,000 in August, leading to a hike in the jobless rate to 9.7%.
Plug in the fact September is traditionally a lousy month for the stock market, as companies begin to see the end of the year coming up fast and have to square those rosier-than expected earnings numbers with reality, and what do you get? Most likely, some post-Labor Day sentiment that things could indeed get better, but it’s not clear how soon, and how much better.
Taken together, those are all good enough reasons for home mortgage borrowers to lock in low interest rates this week, even if you have to pay a nominal - say .5% - discount fee to do so. If you need one more reason to lock in now, consider the latest forecast from Fannie Mae (Stock Quote: FNM) that says mortgage rates are expected to rise throughout the rest of 2010. Fannie Mae says that, with the 10-year Treasury Rate expected to rise, corresponding mortgage rates should rise by about 1% from August to the end of the year.
That would result in a 30-year, fixed-mortgage rate of 6%, and significantly higher payments for ARM holders - all bad news for mortgage borrowers who are weighing whether or not to make the plunge.
As always, get the best deal you can by checking out the best mortgage rates on BankingMyWay.com.