mortgages, inverted yields... it's a topsy-turvy world right now

[nereo]

As part of house-hunting we've been applying for mortgages, moving some savings for down payment to cash and otherwise comparing various rates.

A few things have jumped out that seem bonkers:

• the difference in APR between 30y and 15y fixed is a mere 0.2% in our case (great credit, 20% down)
• rates are stupid-low.  We've gotten quotes down to 3.6% (30y fixed)
• 5/1 ARMs are actually ~0.8% MORE than a 30year fixed  (why would anyone even get an ARM now???)
• the yield on 1 month treasury notes is actually better than 10y and 20y (inverted yield curve)

...weird.

[fuzzy math]

I'm going to cash out refi and switch from a 15  to 30 yr mortgage to boost my investing. I've been looking at mortgage rates too. My local credit union is down to 3.5% for a 30 yr, and 3.25% for 15 and 20 yr notes. I'm actually a little hesitant to lock in a rate soon if we're going to be in an economic free fall soon and rates in the 2.xx% could reappear. I suppose that would be way further down the line in the middle of a recession and too long to wait. Perhaps I'll just refi then again too!

[Boofinator]

Blows my mind that ARM's have higher rates than fixed. Can they really be expecting long-term rates to be significantly lower than today's so that offering a 30-year term with lower rates is the optimum strategy?

[HPstache]

the difference in APR between 30y and 15y fixed is a mere 0.2% in our case (great credit, 20% down)

Is it really only 0.2% difference for you?  I haven't officially gotten a quote yet, but it looks like 0.500%+ difference to me?

[Glenstache]

This is similar to what I saw buying about 6 weeks ago. I think that the Fed has been making noise about lowering rates in the future if the economy slows... not that they have a lot of room to do so since they never really raised them as the economy rebounded.  I opted to the 30 year for a lower monthly required payment and confirmed that there are no early-payoff penalties.

[nereo]

the difference in APR between 30y and 15y fixed is a mere 0.2% in our case (great credit, 20% down)

Is it really only 0.2% difference for you?  I haven't officially gotten a quote yet, but it looks like 0.500%+ difference to me?

Somewhere between 0.2% and 0.35% is the spread I'm getting from most lenders.  My 30y quotes I'm getting are around 3.6%, whereas the 15y are hovering around the 3.4% mark.  Perhaps it's an artifact of my particular file? 

Still, even 0.5% is not a very good incentive to loose all the benefits of having a 30y fixed.  But I guess they can't go too low in rates without loosing money entirely.

[bryan995]

Going through this now for the purchase of a home.

Locked in a 3.5% + $7500 credit (builder lender) on. a 30yr fixed. 20% down + reserves.

Basically forced to use the builders lender given the credit so only worked to get them to match the external offers. If we ever dip into the 2s will do a cash out refi. Also looks like we may have gained >$50k in equity as prices have rose during construction and we are in one of the final phases. Hoping it holds!

[EricEng]

I'd try other lenders if they are only offering .2% for 15 year.  Most are .5% as standard.  I refianced early in the drop and got 15 year 3.375%, but could have got 3.25% if I waited a few weeks.  I wouldn't be surprised to see around 3% for 15 year soon.

I used nerdwallet to shop.  Went with Watermark, closing costs were under 1%.
https://www.nerdwallet.com/mortgages/refinance-rates
Holy crap will they blow up your phone for the next two months after shopping for a refinance.  Still worth the nuisance, but so many calls.

[nereo]

I'd try other lenders if they are only offering .2% for 15 year.  Most are .5% as standard.  I refianced early in the drop and got 15 year 3.375%, but could have got 3.25% if I waited a few weeks.  I wouldn't be surprised to see around 3% for 15 year soon.

I just found the 15y quotes interesting.  We have zero interest in getting such a loan when rates are so low for 30y.  I wouldn't take a 15y even with a 3.0% rate, but that's me.

Yeah, my phone blew up after I used NerdWallet to shop.  c'est la vie.  I got 5 calls within 10 minutes of submitting my application.

[TomTX]

I'd try other lenders if they are only offering .2% for 15 year.  Most are .5% as standard.  I refianced early in the drop and got 15 year 3.375%, but could have got 3.25% if I waited a few weeks.  I wouldn't be surprised to see around 3% for 15 year soon.

I just found the 15y quotes interesting.  We have zero interest in getting such a loan when rates are so low for 30y.  I wouldn't take a 15y even with a 3.0% rate, but that's me.

Yeah, my phone blew up after I used NerdWallet to shop.  c'est la vie.  I got 5 calls within 10 minutes of submitting my application.

I mistyped my phone number. Oops.  Email was correct though.