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Updates for 2006 MortgageUpdates for 2006 Mortgage
kevin said: "Well like it was predicted, Prime Rate is still at 7.25% with Alan Greenspan gone, hopefully on decline however. People with a minimum of 620 FICO score are able to qualify for a 30 year fixed rate at around 5.875%-6.5%. Rates for a 15 year fixed are going right around 5.5%-6% while Option Arm Loans are becoming quite popular with the start rate rising to 2.4%. Looking at the rates in beginning of 2006 compared to the end of 2005, rates are on a gradual decline. The average 30 year fixed has dropped from 6.375% to 5.875%.
One trend that has ceased to decline is the sub-prime market. Those with FICO scores 580-620, are targeted with 7-8% rates on a 2 year arm. A 30 year fixed would result in a 8-9% rate, where it makes absolutely no sense to touch their exsisting loan. Rates of 9-10% are mainly consumed by people with 500-550 FICO scores, unless they have a relatively low loan to value ratio.
People that seem to be doing well in the market, even regardless of their FICO scores, are those who are able to keep their LTV below 65%. Rates are relatively low for even those who have a 500 FICO score, as long as their mortgage balance does not exceed 65% of their home value.
Debt consolidation continues to be a popular preference because of the comparisons of a 20% credit card, which normally take 3-5 years on avergage to pay off. Compared to a high rate of 8-9%, hundreds of dollars can be saved depending on the balances of the credit cards and the minimum payments."