This entry was posted on Friday, January 12th, 2007 at 10:41 am and is filed under Mortgage Rates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Sacramento Mortgage Rate Update
The conforming 30 year fixed rate ended the week around 6%.
Reacting to a string of better-than-expected data reports, the benchmark 10 year Note closed at its highest yield since October. Both December retail sales and import prices reported in higher than expected on Friday, re-igniting inflation concerns and eroding hopes for a Fed rate cut anytime soon.
Shorter term fixed rates—the so called 3/1, 5/1, and 7/1 arms continue to offer rates at or even slightly higher than the 30 year rates, so for now, I’m recommending the 30 year fixed over anything else.
Lenders continue to heavily promote Pay Option ARMs, the reinvented “neg am” loan of the past. Watch out! One new twist created to address concerns about the potential for rapidly rising payments is that payments on these loans can be fixed for 5 years. Don’t let this fool you. These loans cannot negatively amortize beyond 110–115% of their original balance. If you buy the 1% start rate version and your fully indexed rate is 7.5%, you’ll run out of fixed payments long before the 5 years is up, and the payment increase will give you a nasty surprise.
