Prospective buyers have long been using the excuse of rising interest rates as a way of staying on the fence and avoiding commitment. But is this really a valid excuse? Let’s look at some historical data on three different and very common loan products; the 30 year fixed rate mortgage, the 15 year fixed rate mortgage, and the 5/1 ARM mortgage. These comparisons will be done on a national average, and will be for three different periods in time: 5 year average, 1 year average, and a 3 month average.

__30 Year Fixed Rate__

__5 Year Average__-In August 2001 the rate was approximately 6.50%. Our current rate is 6.0%. The principal and interest monthly payment for a $300000 loan at 6.5% is $1896. At the lowest point, approximately June 2003, the rate was approximately 5.0%. The principal and interest monthly payment for a $300000 loan at 5.0% is $1610. The principal and interest monthly payment for the same size loan at 6.0% is $1799. The difference in monthly principal and interest payment from the lowest point to the current rate is $189. The difference in monthly principal and interest payment from five years ago is now $97 less.__1 Year Average__-In August 2005 the rate was approximately 5.25%. Our current rate is 6.0%. The principal and interest monthly payment for a $300000 loan at 5.25% is $1657. The principal and interest monthly payment for the same size loan at 6.0% is $1799. The difference in monthly principal and interest payment is $142.__3 Month Average__-In May 2006 the rate was approximately 6.25%. Our current rate is 6.0%. The principal and interest monthly payment for a $300000 loan at 6.25% is $1847. The principal and interest monthly payment for the same size loan at 6.0% is $1799. The difference in monthly principal and interest payment is now $48 less.- At it’s best, within the last five years, this loan would have cost prospective homebuyers approximately $189 less per month than it does at the current rate. This loan currently costs $48 less per month than it did three months ago, and $97 less per month than it did five years ago.

__15 Year Fixed Rate__

__5 Year Average__-In August 2001 the rate was approximately 6.0%. The current national average rate is 5.75%. The principal and interest monthly payment for a $300000 loan at 6.0% is $2532. At the lowest point, approximately June 2003, the rate was approximately 4.45%. The principal and interest monthly payment for a $300000 loan at 4.45% is $2295*. The principal and interest monthly payment for the same size loan at 5.75% is $2491. The difference in monthly principal and interest payment from the lowest point to the current rate is $196. The difference in monthly principal and interest payment from five years ago is now $41 less.__1 Year Average__-In August 2005 the rate was approximately 5.0%. The current national average rate is 5.75%. The principal and interest monthly payment for a $300000 loan at 5.0% is $2372. The principal and interest monthly payment for the same size loan at 5.75% is $2491. The difference in monthly principal and interest payment is $119.__3 Month Average__-In May 2006 the rate was approximately 5.92%. The current national average rate is 5.75%. The principal and interest monthly payment for a $300000 loan at 5.92% is slightly more than $2511**. The principal and monthly interest payment for the same size loan at 5.75% is $2491. The difference in monthly principal and interest payment is now $20 less.- At it’s best, within the last five years, this loan would have cost prospective homebuyers approximately $196 less per month than it does at the current rate. This loan currently costs $20 less per month than it did three months ago, and $41 less per month than it did five years ago.

__5/1____ARM__

__5 Year Average__-In August 2001 the rate was approximately 5.875%. The current national average rate is 5.75%. The principal and interest monthly payment for a $300000 loan at 5.875% is $1775. At the lowest point, approximately June 2003, the rate was approximately 3.75%. The principal and interest monthly payment for a $300000 loan at 3.75% is $1389. The principal and interest monthly payment for the same size loan at 5.75% is $1750. The difference in monthly principal and interest payment from the lowest point to the current rate is $361. The difference in monthly principal and interest payment from five years ago is now $25 less.__1 Year Average__-In August 2005 the rate was approximately 4.875%. The current national average rate is 5.75%. The principal and interest monthly payment for a $300000 loan at 4.875% is $1588. The principal and interest monthly payment for the same size loan at 5.75% is $1750. The difference in monthly principal and interest payment is $162.__3 Month Average__-In May 2006 the rate was approximately 5.80%. The current national average rate is 5.75%. The principal and interest monthly payment for a $300000 loan at 5.80% is $1760. The principal and interest monthly payment for the same size loan at 5.75% is $1750. The difference in monthly principal and interest payment is now $10 less.- At it’s best, within the last five years, this loan would have cost prospective homebuyers approximately $361 less per month than it does at the current rate. This loan currently costs $10 less per month than it did three months ago, and $25 less per month than it did five years ago.

* This dollar amount assumes a rate of 4.50%. The mortgage calculator being used automatically rounds to the nearest whole number.

** This dollar amount assumes a rate of 5.875%. The mortgage calculator being used automatically rounds to the nearest multiple of five.

*** All figures used here are approximations and are used for demonstrative purposes only. All historical data and figures are taken from http://realestate.yahoo.com, the fixed rate calculator provided by www.countrywide.com and the ARM calculator provided by www.vertex42.com.

## Review

##### Mortgage Rates Are No Excuse Not to Buy - 92%

### 92%

Prospective buyers have long been using the excuse of rising interest rates as a way of staying on the fence and avoiding commitment. But is this really a valid excuse? Let’s look at some historical data on three different and very common loan products; the 30 year fixed rate mortgage, the 15 year fixed rate mortgage, and the 5/1 ARM mortgage. These comparisons will be done on a national average, and will be for three different periods in time: 5 year average, 1 year average, and a 3 month average.