As expected mortgage rates moved higher this week. Over the past couple of weeks 10 year bond yields have risen from around 1.75% to 2.15% despite the Fed’s effort to lower long term yields.

Mortgage rates are indexed to bond yields so higher yields will mean higher mortgage rates this coming week.

The average rate for the conventional 30-year fixed-rate mortgage dropped below 4% for the first time in history, while the 15-year fixed-rate mortgage fell to its lowest level on record for the sixth consecutive week, according to Freddie Mac's Primary Mortgage Market Survey.

Monthly Average Commitment Rate and Points on 30-Year Fixed-Rate Mortgages Since 1971

 

The pros of a 30-year fixed mortgage:

 It's a predictable monthly payment; it's a hedge against inflation (the rate is not tied to the index, so it doesn't go up or down); it's relatively simple and maintenance-free (you don't need to worry about rate fluctuation); it provides a tax deduction from the interest you pay on your mortgage; and if rates drop significantly, you can refinance.

Here's a small random sample of loan rates drawn from the survey of objective information we collect every day. Our database contains current data on thousands of loans from lenders coast to coast.

 

Many people ask me my opinion on the pros and cons of getting a 5 year Adjustable Rate Mortgage (ADJUSTABLE RATE MORTGAGE) versus a 30 year Fixed mortgage.

What follows is a thorough analysis, a “White Paper,” backed up with a lot of numbers on amortization schedules, to document my conclusions.

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