NYC Expensive, Mortgage Rate Curve Flattening
Our initial impetus to “borrow” this chart from the Wall Street Journal was the Housing Index, but upon closer inspection we realized there wasn’t anything too surprising contained therein. Far more interesting, in our opinion, is the mortgage rate data, which shows how much the spread has narrowed between a 30-year fixed and a 5/1-year…
Our initial impetus to “borrow” this chart from the Wall Street Journal was the Housing Index, but upon closer inspection we realized there wasn’t anything too surprising contained therein. Far more interesting, in our opinion, is the mortgage rate data, which shows how much the spread has narrowed between a 30-year fixed and a 5/1-year ARM over the past year: It’s gone from over a hundred basis points (1%) to just 70 basis points (0.7%). Obviously that makes perfect sense in light of the Fed increases and the ensuing flattening of the yield curve, but we wonder if it’s causing more people to opt for the old-school 30-year fixed, as we recently did when we refinanced our house after getting our TCO.
Starter Home Index [Wall Street Journal]
I got 5.50% 30yr fixed with no points from Citimortgage in mid-July through a broker (not jumbo). His ~1 point fee paid by bank meant the underlying rate was ca. 5.23. The underlying 30 yr rate tracks the 10 year T-bill closely; you can watch that daily to know when to lock. Underlying rates are now up around 5.33, so no-points 5.625 should be possible, and certainly 5.75.
If you do the math, including tax deduction on interest, you want to be sure of holding on to the place for 5-6 years or more before points make any sense; otherwise you might as well invest those $$$ and use the interest to pay off a little more principal. Or use those $$$ on home improvement to raise the underlying equity and make it a nicer place to live.
You get the current bank to “Assign” the mortgage to the new one…
I’d like to refinance my 1 year ARM which was jumbo when we took it out but isn’t anymore. We may also want to fix. How do you refi without paying the mortgage recording tax again? Do you have to stay with the same lender?
Are folks here adverse to paying points? If you plan on staying in your place a while(3-4 years) paying points may be advantages. This summer i refi’d through IndyMac. I highly recommend them. It took 40 days from first phone call until closing(at my own home). The rates very competitive. I got a stated fixed 30yr @ 5.75 with 1.25 pts.(6.25 w/out points). Full doc’s were a full .5% lower. I did not have to pay extra for jumbo size(loan greater than 650K). Nor did I not have to pay extra for 3-4 family building and got a 45 day look. Before any goes with their broker, give indymac a look. Here is there quick pricer. http://www.indymacmortgage.com/loanworks/default.asp
We got 6% 30-year fixed directly through Chase. Zero points. But we locked it earlier in the summer before rates rose and then dropped again.
oops – that’s 5.375 on the 5/1
ltj
I am getting quoted higer numbers for my refi:
5.875% on a 5/1 I/O ARM
and 6% on a 30-year fixed
This is with good credit and income. Do you have to pay points to get those rates?
Who’s your mortgage broker?
Wow! So what are you going to do?