The fluctuation of home mortgage rates is one of the benchmarks of the overall economy because interest rates are largely tied to the decisions made in New York by the Federal Reserve, among many other economic factors. Interest rates are adjusted according to the financial matters in the US such as exportation and inflation because such factors determine how easy or hard it would be to borrow and lend money.
Mortgage rates are used to help control the economy. If the movement of the economy is deemed to be too fast, higher rates are imposed so that individuals and corporations would be less willing to apply for loans. Conversely if the economy seems to be rather slow or stagnant, rates are lowered so that people would be more enticed to do more business transactions.
Trends in Home Mortgage Rates
It is quite interesting to know that mortgage rates have been lower than 8.5% since the year 1996, with the lowest rates of about 5.5% seen on the middle of 2005. While individuals might see an extremely different mortgage rate at a particular time due to other factors that affect rates (their salaries or credit histories), the trend has generally been observed to be generally consistent throughout financial circles.
The fall of interest rates from the high figures prior to 1996 has allowed a lot of people to buy their homes, purchase lands, or more to larger houses. Perhaps this reflects an effort to speed up the economy from that time up to now. However this year, the rates are rising probably because of an upsurge that the American economy has experienced in the previous year.
Current Home Mortgage Rates
Mortgage rates in the year 2006 are generally higher than that of the previous year with rates of about 6 percent for 30-year fixed rate mortgages (FRM). As of the 21st of September, 30-year FRMs have an average rate of 6.40%, while 15-year FRMs have an average rate of 6.06%. Adjustable Rate Mortgages (ARM) on the other hand are slightly lower with 5/1-year ARMs having an average interest rate of 6.08% and 1-year ARM having a mean rate of 5.54%.
The difference between this year’s and last year’s interest rates are not really significantly high as it would entail only a few hundred dollars increase in yearly payment rates. This probably would not stop a lot of people from getting mortgages, however if the rise continues, more people would become hesitant to get home loans.
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