Mortgage Rates Experience Historic Drop

Mortgage rates experienced a historic drop this month. 30 Year rates fell from 5.97 to 5.53. This is the lowest rates have been since January 2008. But I think this understates how low mortgage rates are this week so I did a little research. Since 1974 rates have been lower than today's rates only four times. Below are the dates and mortgage rates.




1) June 2003 5.23


2) March 2004 5.45


3) May 2003 5.48


4) January 2008 5.48


5) December 2008 5.53




Although we looked over a period of 34 years it was interesting that three of the four months with the lowest mortgage rates were in 2003 and 2004. This was basically when Greenspan was cutting the fed rate to prevent the US from going into a recession. A lot of people now blame Greenspan for causing the housing bubble and our current problems. While he might be partially to blame personally I think the massive number of subprime loans (basically loans to people that have a poor credit history) and interest only loans contributed to the problem as well.




The main difference between today's low rates and the rates we saw in 2003 and 2004 is that 5 years ago pretty much anyone with a pulse could get a loan. In the current market rates are low but banks are much more restrictive about giving out loans.




Below are rates for the last few weeks.




December 4, 2008


30-yr 5.53 15-yr 5.33 5-yr ARM 5.77 1-yr ARM 5.02




November 26, 2008


30-yr 5.97 15-yr 5.74 5-yr ARM 5.86 1-yr ARM 5.18




November 20, 2008


30-yr 6.04 15-yr 5.73 5-yr ARM 5.87 1-yr ARM 5.29




November 13, 2008


30-yr 6.14 15-yr 5.81 5-yr ARM 5.98 1-yr ARM 5.33




November 6, 2008


30-yr 6.20 15-yr 5.88 5-yr ARM 6.19 1-yr ARM 5.25




It interesting that 5 year rates are significantly higher than 30 year rates. This is the first time 30 year rates have been significantly lower than the 5 year ARM. It pretty much means 5 year rates are pointless at this point. There is no real reason to get a 5 Year ARM when you can get a better rate on a 30 year loan.




Looking at mortgage rates is one thing but let's translate this into mortgage payments. Using our mortgage calculator we translated today's mortgage rates into a mortgage payment on a 200k house. For good measure we did the same thing with last weeks rates and last months rates.




December 4th


30-yr $1139.34


15-yr $1616.18


5-yr ARM $1169.68


1-yr ARM $1076.08




November 26th


30-yr $1195.24


15-yr $1659.74


5-yr ARM $1181.15


1-yr ARM $1095.75




October 30th


30-yr $1258.87


15-yr $1708.31


5-yr ARM $1245.77


1-yr ARM $1120.56




Looking back to October 30th we can see that payments have come down $119.53 or about 10%. This is pretty substantial. In contrast payments on a 1 year arm have only fallen by $44.48 or about 4%.




So what is going to happen moving forward? I would expect continued wild fluctuations in the mortgage market. We have been seeing large one week changes for the last month and there is no reason that we will not see more wild swings moving forward. Therefore if you are considering a house I would lock in at current rates instead of waiting.




So what about the proposal being considered by Congress to push rates down to 4.5%? I can't say for certain if this will happen or not. It looks on track to pass now but that could change. If it does pass I think it will spur allot of real estate activity. It's not just that rates will be lower but getting rates below 5% is kind of a psychological barrier. I think just seeing rates that are 4.xx will grab people's attention. But that said if there is an increase in activity I expect prices to move up. I highly doubt they will recover to what we saw a year or two ago but we will probably see higher prices than what we are seeing today at least temporarily. After the initial shock has worn off the economy will probably determine what happens with real estate prices.

Ki works as a realtor in Austin Texas. His site has a search of the Austin MLS. It also has a mortgage rates widget and a mortgage calculator widget.

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A Guide To Successful Commercial Property Loan Application

Whether it is the expansion of the existing business or the start of a new business, a commercial property loan helps businesses acquire real estate such as land to set up manufacturing plant, office space, space for staff quarters etc. Much like a home mortgage, the property purchased is held as collateral against the loan.




However there is a major difference between commercial mortgages and home mortgages. While home mortgages are relatively easy to obtain, commercial mortgage approval requires a thorough scrutiny of the papers, credit report and financial viability of the company and of the location, condition, and viability of the property you're interested in buying.




A solid business plan and careful evaluation of the property are essential for getting approval for a commercial property loan. Here is how you can improve your chances of getting approval for your commercial property loan application.




Choose the right property




The characteristics of the property are the first crucial aspects any lender would scrutinise. So choose a property which is legally clean, situated in a good location, has all the required environmental approvals and is in good condition.


Take the help of your real estate agent to evaluate foot and vehicle traffic, zoning regulations, and previous uses of the property.




Prepare for the application well




There will be minute scrutiny of all the papers you have submitted along with the application. Hence prepare detailed financial reports, including balance sheets, tax documents, and sales records, to show the overall health of your business.




Following is a discussion of some basic aspects of what are considered as well-prepared documents:




??? Keep your income tax returns regular and complete. You would need to furnish at least the last two years??? tax returns. So they should be complete in all respects.




??? If you have applied for an extension, make sure that you have the extension ready and it has not expired.




??? In case of an extension, complete the year end financial statements in all respects.




??? You would need to provide your bank statements for the last three months.




??? In case you are looking at refinancing your commercial property loan, you would need to furnish your pay off statements, survey, title policy, and appraisal to the lender, so keep them ready.




??? Prepare and produce the costs of building the new facility, staffing, and insurance, as well as contingency plans in case you fall behind your goals.




??? Get your latest personal credit report and in case of any negativity, clear it or have a valid explanation incorporated. Do have the documentary proof to back the explanation ready.




Choose the right lender




Since the terms and conditions including the interest rate will differ from lender to lender, it is important to approach a lender who will not only fulfil your requirements, but will also offer attractive interest rates and easy terms and conditions.




A good pointer is the experience as a lender and proven successful businesses as references. Brokers can be of great help as they are networked with most of the lenders providing commercial mortgages in the UK.




Also, a good and experienced lender usually helps the borrower to hunt for a good property and prepare the necessary papers. Plus, the lender should be willing to guide you through the process of gathering information and applying for your commercial property loan.

Richard Heaney is a writer on business and finance, specialising in writing on financial planning, commercial property loan, commercial mortgages in UK etc.

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