Adjustable Rate Mortgage (ARM) Holders are Refinancing to Fixed Rates
Katz Mortgage Team of Fairway Independent Mortgage Corp., has announced that Fixed Mortgage Rates are now at their lowest point in over a year. They are officially changing their recommendation from “HOLD” to “REFI” for many of their clients who took advantage of the extremely low adjustable rate mortgages of 2002 and 2003.
Just this past week, the US Treasury 10 year Note dropped to 4.4% for the first time in a year. This translates to thirty-year fixed rate mortgages dropping from the high 6% range in July of this year down to the mid 5% range today. Many on Wall Street feel that a slowing of the real estate market, coupled with higher energy costs have pushed rates down. They also caution that as unemployment stays around the 4.5% mark and the economy starts to heat up, inflation fears will once again push rates in the opposite direction.
During the unprecedented refinance boom of 2002-2003, many homeowners took out 5 year and 3 year adjustable rate mortgages at historically low rates. Most of these are tied to either the one-year LIBOR or one year T-Bill. Today those loans would adjust to rates in the 7.5 to 8% range, which means that many homeowners could see mortgage payments rise 25 to 40%.
Stephen Katz, of Katz Mortgage Team states, "Many of our clients took advantage of the super low ARM rates of 3 and 4 years ago and have saved a tremendous amount of money. But now we urge these homeowners to take a look once again at refinancing to a more stable fixed rate. If a family plans to stay in their current home for more than two years, or if they plan to keep it as a rental, now is the perfect time to switch from an Adjustable Rate Mortgage and go back to a fixed rate.”
In today’s mortgage marketplace, there are a number of fixed rate terms as well as fixed rate interest-only options that help keep payments low at a constant interest rate. Borrowers can choose to get the lowest rate possible or may prefer to go with a zero closing cost loan.
Katz reiterates, “We are in this tenuous window of opportunity with rates. If one has a 3 or 5 yr ARM, a low fixed rate may be the best Christmas present they get this year”.
