Mortgages End the Year Up

There's been no surprise for me in the latest mortgage news: While fixed rate mortgage rates declined for the third straight time in Freddie Mac's Weekly Primary Mortgage Market Survey for the last week of 2005, they had traveled a small difference upwards from where they started the year. On the other hand, while adjustable rate mortgages declined slightly during the last full week of the year, their increase from January 2005 levels was substantial.

So, the mortgage market has changed over the past year, and it may be time to think about what is right for you. Not all mortgages have been impacted equally by interest rate increases. In fact, we now have the data to see clearly that adjustable rate mortgages have taken the biggest steps forward, while the competitiveness of fixed-rate mortgages is getting more attractive.

How much have the adjustable mortgages been impacted? The 5/1 hybrid was up three-quarters of a point since early January according to Freddie Mac and the 1-year climbed more than a full point.

Should you lock in? Well, it may be the right time. The difference between payments on a $200,000 30-year fixed mortgage and a 1-year ARM dropped from $205 per month in January to $135 last week. Security in your payments is beginning to look a lot more financially attractive. Only the most financially-strapped would be inclined to select the ARM and then hope that interest rates will not go up too much.

Security or lower interest rates? The decision is getting more difficult as the options move closer together.


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