This is good news for homeowners; particularly those with adjustable rate mortgage loans. Mortgage interest rates are at their lowest levels for the past three months. While interest rates for traditional fixed rate mortgage loans are still higher than they were one year ago, interest rates are at their lowest point since October of 2005.
According to a survey of one national mortgage lender, a 30 year fixed interest rate mortgage loan dropped to 6.1% this week. This is down from 6.15% the previous week. At this time last year the same mortgage loan was running 5.67%.
The inverted yield curve still exists in the market place this week as short term interest rates are up again; a one year adjustable rate mortgage loan (ARM) is currently at 5.18%. Last week a one year ARM was 5.15%. The past six weeks have seen long term mortgage rates off by almost one quarter a percent; this drop seems to have little to do with easing inflationary tendencies in the market. The housing market is predicting mortgage interest rates will favor homebuyers for the remainder of 2006.
This is great news for homeowners with Adjustable Rate Mortgages such as option and interest-only loans. These homeowners have an excellent opportunity to refinance their riskier adjustable rate loans to traditional fixed interest rate mortgages before interest rates resume their stair-stepper increases at the hands of the Federal Reserve.