15-Year Mortgages Now Cheaper Than 1-Year ARMs

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Freddie Mac released its weekly update on national mortgage rates this morning, showing a slowing, but continued slide, in rates across the board.

For the fourth week in a row, 30-year fixed rate mortgages (FRM) declined, falling one basis point to 3.40%. Shorter-term 15-year FRMs likewise fell for their fourth straight week, dropping three basis points to 2.61%.

Variable rate mortgages were also down. One-year ARMs lost a single basis point, falling to 2.62%. And 5/1 ARMs lost two basis points to reach 2.58%.

Result? It's now cheaper to get a mortgage in which the rate can't possibly go up for the next 15 years, than it is to take out a mortgage whose rate could skyrocket just a year from now.

While not entirely unheard of, this kind of event is exceedingly rare. Freddie Mac spokesman Chad Wandler confirms that in the past 20 years or so, there have really been only two periods in which one-year ARMs cost more than 15-year mortgages -- in late 2000, when the yield curve was inverted, and then again in 2009, when ARM premiums peaked.

This makes the phenomenon, if not exactly an historic first, rare enough to make a blue moon seem commonplace.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2386861, ~/Articles/ArticleHandler.aspx, 9/25/2016 10:31:46 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes