Fear of inflation may finally make adjustable mortgages unattractive
Today's Realty Times is reporting that Freddie Mac just released the results of its Primary Mortgage Market Survey in which the 30-year fixed-rate mortgage averaged 6.37 percent with an average 0.5 point for the week ending October 12, 2006, up from last week when it averaged 6.30 percent. Last year at this time, the 30-year FRM averaged 6.03 percent. The 15-year FRM this week averaged 6.06 percent with an average 0.5 point, up from last week when it averaged 5.98 percent. A year ago, the 15-year FRM averaged 5.62 percent. Treasury related mortgages were all up, also.
"Renewed concern that inflation is still an issue put some upward pressure on bond yields, which generally translates into higher interest and mortgage rates," said Frank Nothaft, Freddie Mac vice president and chief economist. "ARM rates especially felt the weight of increased inflation fears, narrowing the gap between ARMs and fixed-rate mortgage rates. Thus, ARMs may become less desirable."
Please, let it be true. I've been doing this long enough to state categorically that the vast majority of borrowers I deal with regret their decisions to finance their homes with adjustable rate mortgages.