The Benefits of ARM’s; St Louis Mortgage Interest Rate Update

Over the past few years, ARM’s (adjustable rate mortgages) have received somewhat of a “bad name” however, there are truly benefits to utilizing an ARM, which include:

  • ARM rates are now more attractive than ever before.
  • Rates have fallen to 2.625% for a 5/1 ARM.


  • ARM’s are predictable:
  • Rates are capped so there are no surprises for borrowers.
  • Rates adjust only on the remaining principal of the loan.
  • Rate adjustments could decrease/increase, but the adjustments are limited to a prevailing market index in which the ARM is based.
  • Most ARM’s do not have a pre-payment penalty
  • Lower Monthly Payments which Increase your buying power.

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Mortgage rates decline this week on better than expected economic news

Dennis Norman

Dennis Norman

According to Freddie Macs weekly mortgage market survey mortgage rates decreased slightly for the week ending August 6, 2009 from the prior week. The survey shows 30 year fixed rate mortgages averaging 5.22% with 0.6% in fees and points, down from 5.25% the week before. Last year at this time, the 30 year rate averaged 6.52%.

Rates on 15 year fixed-rate mortgages decreased slightly as well, down to 4.63% from 4.69% the week before, 5/1 ARM’s held about the same at 4.73% and 1 year ARM’s as well as 4.78%. This time last year these arms were 6.05% and 5.22% respectively.

Missouri is included in the southwest region on Freddie Mac’s survey and rates in our region were pretty consistent with the national averages reported above for fixed rate loans, however 5/1 arms in our region averaged only 4.64% compared with 4.73% nationally, and 1/1 arms in our region were 5.05%, quite a bit above the national average of 4.78%.

“Better-than-expected economic reports helped to keep mortgage rates low this week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The economy slowed by an annual rate of 1 percent in the second quarter, which was more positive than market forecasts.”