The Latest on Mortgage Rates

Bankrate.com is reporting that the average 30 year fixed mortgage rate increased to 5.70% for the week ending February 4, compared to 5.48% the week before. That's the highest it's been in six weeks, and the increase probably has a lot to do with the uncertainty with the Federal economic stimulus package.

Any 30 year rate below 6 percent should be very attractive to any buyer, as well as home owners whose interest rate is well north of the six percent level. Less than four months ago the average interest rate on a 30 year loan was 6.75%. Back in 2000 it was above 8%. If we go back to 1990 figures we see that it stood above 10% for most of the year. (thanks to Bankrate.com for providing these historical figures).

We've been hearing of buyers who have been trying to time the market to get the lowest rate possible. A rate difference of just half a percent can add up to tens of thousands of dollars over the life of a 30 year mortgage (see below), but these folks risk getting a rate higher than they could have gotten in the first place. My advice is to shop around for the lowest rate possible with a broker or direct lender who agrees to let you "float" down your mortgage to a lower rate during the lock in period, should a lower rate become available. Most reputable brokers & lenders will allow you to do this. Remember that one of the keys to a low interest rate is having the all important credit score.

To help give you a quick idea of the affect different interest rates have on a mortgage, I used ForSaleByOwner.com's mortgage calculator to come up with these scenarios on a $250,000 30-year mortgage:



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