Mortgage rates were mixed this week, with fixed rates moving to the highest levels since mid-October while adjustable rates pulled back. With the Federal Reserve expected to cut interest rates again at their meeting in March, rates for things like adjustable rate mortgages that are tied to short- term benchmarks have been moving lower. But concerns about inflation and continued turmoil in credit markets has pushed long-term interest rates, and especially fixed mortgage rates, higher. Even though the difference between fixed and adjustable mortgage rates has grown, borrowers should be wary about gravitating toward lower payment adjustable rate mortgages and taking on the unwanted risk of future interest rate adjustments. Borrowers should carefully calibrate their choice of mortgage product with their intended stay in the home in order to minimize exposure to higher rates later.
The mortgage rate winds can change direction quickly. Five weeks ago, the average 30-year fixed mortgage rate was 5.57 percent, meaning that a $200,000 loan would have carried a monthly payment of $1,144.38. Now that the average conforming 30-year fixed rate is 6.41 percent, the same $200,000 loan carries a monthly payment of $1,252.32.
