Mortgages & Refinancing

HELOC Rates

Bankrate.com reports recent home equity line of credit (HELOC) rates with FICO score 700-719 at:
$30K HELOC
4.18

$50K HELOC
3.86

$75K HELOC
3.73

Trips and traps lurk in Home Equity offers

Home Equity Line of Credit vs. Home Equity Loan

YOU see offers to get easy cash from the equity in your home, so that you can pay off your monstrous credit-card bills, home improvement costs and other things you owe.

They're called home equity loans and home equity lines of credit.

The difference?

A home equity loan is a straight loan, typically for up to 70 percent or 75 percent of the equity in your house - although some lenders will go as high as 125 percent - usually at a fixed rate of about 6.9 percent.

An equity line rate is almost always variable, and now averages 3.73 percent for a $30,000 line, and 3.07 percent for $75,000, according to Bankrate.com.

Odds are that if you have a high credit score, your interest rate will be a little lower.

The loans and credit lines have become super-popular as more Americans have fallen into debt - what easier way than to borrow money against your home? But before you grab such a loan, there are a number of tricks and traps you need to learn beforehand.

With a home equity loan, you pay it back via equal monthly payments over a specific period of time, while the line of credit works with a revolving balance like a credit card and minimum monthly payments that only cover the interest.

Mortgages: The unlikely case for fixed-rate loans

WSJ's Mortgages: The unlikely case for fixed-rate loans

Thursday, February 24, 2005
By Ruth Simon, The Wall Street Journal

A surprising shift in interest rates is reshaping the landscape for home buyers and borrowers.

As the Federal Reserve has boosted short-term rates, it has become more expensive to take out adjustable-rate mortgages and home-equity lines of credit. Usually when short-term interest rates go up, long-term interest rates go up as well. But confounding many experts, rates on 10-year Treasurys -- the benchmark for long-term, fixed-rate mortgages -- have been edging downward or moving sideways.

The upshot is that ARMs are getting costlier while fixed-rate mortgages have been getting less expensive. And that means ARMs _ which can offer big savings over long-term fixed-rate mortgages _ are losing some allure. Currently, rates on one-year ARMs average 4.36 percent, just 1.35 percentage points below the 5.71 percent rate on 30-year fixed-rate mortgages.

As recently as last July, one-year ARMs were averaging more than two percentage points below 30-year fixed-rate loans, according to HSH Associates, financial publishers in Pompton Plains, N.J.

Some lenders are starting to see a shift in borrower preferences, as people begin to trade in short-term ARMs for fixed-rate loans or adjustables with longer fixed periods. At Wells Fargo & Co., the proportion of borrowers choosing fixed-rate loans has risen to levels not seen since last March. More borrowers are also opting for adjustables that are fixed for the first 10 years. Countrywide Financial Corp. says refinancing activity has been "exceptionally strong."

If long-term rates edge down much further, some mortgage analysts predict a refinancing boomlet. As many as 65 percent of borrowers could profitably refinance if long-term rates drop to 5.40 percent, says Dale Westhoff, head of mortgage research at Bear Stearns Cos.

.....

Usually long-term rates move up when short-term rates increase. Instead, just the opposite has been occurring. Rates for 30-year fixed-rate mortgages have been closing in on last year's lows of about 5.53 percent, though they rose slight last week.

....

Home-equity lines of credit, while still popular, are also losing some luster because they, too, are tied to rising short-term rates. Lou Barnes, a mortgage broker in Boulder, Colo., says he started getting calls from anxious borrowers just after Christmas. "People who got into a home-equity line 18 months ago with a 3 percent rate are now staring at 5.5 percent," he says. Home-equity lines of credit are typically tied to the prime rate, which has climbed to 5.5 percent from 4 percent in June.
(see wsj for full article)

Fixed mortgage rates down for 3rd straight week

Thu Jan 20, 2005 12:33 PM ET
WASHINGTON, Jan 20 (Reuters) - Interest rates on U.S. 30- and 15-year mortgages fell for a third straight week, mortgage finance company Freddie Mac said on Thursday.

U.S. 30-year mortgage rates fell to an average of 5.67 percent this week from 5.74 percent last week.

Freddie said 15-year mortgages fell to an average of 5.15 percent from 5.19 percent a week earlier. One-year adjustable rate mortgages averaged 4.11 percent, little changed from 4.10 percent last week.

A year ago, 30-year mortgage rates averaged 5.64 percent, 15-year mortgages 4.95 percent and the ARM 3.56 percent.

This is great news if you are looking to buy a new home and need a mortgage or are still thinking of refinancing your existing mortgage or doing some cash out equity mortgages!

30-year Mortgage Rate Drops

January 16, 2005

Rates on 30-year mortgages fell for a second straight week according to Freddie Mac's weekly survey of mortgage rates released Thursday. Rates on 30-year, fixed-rate mortgages averaged 5.74 percent for the week ending Jan. 13, down from 5.77 percent the previous week.

Amy Crews Cutts, the mortgage company's deputy chief economist, noted 30-year mortgage rates averaged 5.84 percent for all of 2004. She said rates are likely to end 2005 above 6 percent, reflecting in part the Federal Reserve's credit tightening campaign, raising rates to control inflation.

Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, dipped to 5.19 percent last week, down from 5.21 percent the previous week. One-year adjustable-rate mortgages remained unchanged at 4.10 percent.

Freddie Mac added a five-year, hybrid adjustable-rate mortgage to the survey. The rate on that mortgage averaged 5.05 percent last week, up slightly from 5.03 percent the previous week.

The nationwide averages for mortgage rates last week do not include add-on fees known as points. The 30-year, 15-year and one-year adjustable mortgages each carried a 0.6-point fee. The five-year adjustable mortgage carried a 0.5-point fee.

A year ago, rates on 30-year mortgages averaged 5.66 percent; 15-year mortgages averaged 4.97 percent, and one-year ARMs were at 3.62 percent.

Mortgage Rates Rise

The benchmark 30-year fixed-rate mortgage rose 10 basis points to 5.82 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.35 discount and origination points. One year ago, the mortgage index was 6.07 percent.

The 15-year fixed-rate mortgage rose 8 basis points to 5.24 percent. The one-year adjustable-rate mortgage rose 11 basis points to 4.24 percent.

Mortgages Rates Predicted to Continue Up

Each week, Bankrate.com surveys mortgage experts to gauge the state of mortgage rates over the next 30 to 45 days: Will rates rise, fall or remain relatively unchanged?

This week (Dec. 2 - Dec. 8) the experts say: It's beginning to look a lot like mortgage rates are going up.

PANEL:
Down: 0%
Up: 84%
Unchanged: 16%

Eighty-four percent of mortgage experts believe that rates will rise over the next 30 to 45 days. The rest predict that rates will remain about the same (plus or minus 2 basis points) and no one thinks rates will fall.

Might be a good time to lock in your rate or refinance if you haven't yet. Check out the lenders to the right for some great deals.

Fed Rates Raised to 2 percent

The Fed's rate-setting committee raised the target federal funds rate a quarter point today, to 2 percent.

"With underlying inflation expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured," the Fed announced, in an acknowledgment that further increases will follow. "Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability."

The increase will raise the prime rate to 5 percent. Consumer loans based upon the prime rate, like variable-rate credit cards, home equity lines of credit and auto loans, can be expected to rise about a quarter point.

Refinancing May Get New Life

The Lexington Herald-Leader has an interview suggesting that though the Fed is raising rates, refi's may increase:

An industry leader says mortgage rates have been falling and refinancing might get new life

Q: The Federal Reserve is raising interest rates again. What is the Fed trying to do?

A: When the Fed raises short-term rates, what that says to the market is that they're going to be aggressive in trying to control inflation. Long-term rates actually go down.

It's overlooked sometimes, but mortgage rates have been falling pretty steadily for about six weeks or two months. The 10-year Treasury note is down to levels they hadn't seen since early last spring.

Q: How long will that trend continue?

A: Our best guess is that we will see rates creep up over the next year.

To translate that into volumes, if you look at 2003 as a whole, nationwide, we originated $3.8 trillion in residential mortgages. This year, our best guess is that it will be closer to $2.6 trillion.

We'll still have the second-best year in the industry's history if we come in at $2.6 trillion. So, that's worth noting.

It's also worth noting that almost all of that reduction was at the expense of refinance (replacing an older mortgage with a new one to get a lower interest rate). "Refi" rates have dropped. Last year, about 65 percent of all mortgages were refi; this year, it will be closer to 35-40 percent.

So we're looking at a drop to $2.6 trillion in new mortgages this year, and then our best guess for 2005 is $1.8 trillion. Again, most of that decrease is going to come from the continued decrease in refis.

Now, all that having been said, there's a chance we'll go through another little refi blip here. If rates get much lower, there will be a lot of people who have gotten mortgages in the past year who will be good candidates to come in and refi. And you always have folks who are looking to refi and take cash out of their equity. This would be a good time to do it.

30-year mortgage rate up to 5.82%

Freddie Mac announced that the average rate on a benchmark 30-year mortgage rose to 5.82 percent this week from 5.72 percent.

The one-year adjustable rate rose to 4.08 percent from 3.97 percent, the Virginia-based mortgage-financing company said.

The 15-year fixed rate rose to 5.24 percent from 5.12 percent.