Huh? Fixed-rates are cheaper?

As the Federal Reserve has boosted short-term
rates, it has become more expensive to take out adjustable-rate mortgages and
home-equity lines of credit. Usually when short-term interest rates go up,
long-term interest rates go up as well. But confounding many experts, rates on
10-year Treasurys — the benchmark for long-term, fixed-rate mortgages — have
been edging downward or moving
sideways.

The upshot is that ARMs are
getting costlier while fixed-rate mortgages have been getting less expensive.
And that means ARMs — which can offer big savings over long-term fixed-rate
mortgages — are losing some allure. Currently, rates on one-year ARMs average
4.36%, just .99 percentage points below the 5.35% rate on 30-year fixed-rate
mortgages.

As the Federal Reserve has boosted
short-term rates, it has become more expensive to take out adjustable-rate
mortgages and home-equity lines of credit. Usually when short-term interest
rates go up, long-term interest rates go up as well. But confounding many
experts, rates on 10-year Treasurys — the benchmark for long-term, fixed-rate
mortgages — have been edging downward or moving
sideways.

The upshot is that
ARMs are getting costlier while fixed-rate mortgages have been getting less
expensive. And that means ARMs — which can offer big savings over long-term
fixed-rate mortgages — are losing some allure. Currently, rates on one-year
ARMs average 4.36%, just .99 percentage points below the 5.35% rate on 30-year
fixed-rate
mortgages.


Usually
long-term rates move up when short-term rates increase. Instead, just the
opposite has been occurring.

This
is good news for the market. Realestatejournal has more.

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