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To: dennis michael patterson who wrote (22099)	8/5/1999 1:07:00 AM
From: Steve Smith	Respond to of 99985

Mortgage rates going back up. --------------------------------------------------- MORTGAGE RATE ALERT August 4 1999 News every informed consumer can use --------------------------------------------------- This newsletter is a subscription-based free service of bankrate.com. We apologize if you have already asked to be unsubscribed from this newsletter. Those requests have been recorded and will be processed once our new delivery system is running. In the meantime you will only receive alerts such as this one if mortgage rates change by a certain percentage. The HTML version of this alert is currently unavailable. This text version is being sent to all subscribers. For more news and daily rates for your area please visit your online guide to changes in the personal finance industry - bankrate.com And check out this edition's sponsor: Mortgage.com mortgage.com +-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+ --- IN THIS EDITION 1) Mortgage Rate Alert 2) Today's Average Mortgage Rates 3) More Mortgage News 4) Mortgage Resources 5) Subscribing and Canceling +-+-+-+-+-+-+-+-+-+-+-+-+-+ 1) MORTGAGE RATE ALERT +-+-+-+-+-+-+-+-+-+-+-+-+-+ Mortgage rates soar again By Michael D. Larson -- bankrate.comSM Mortgage rates continued their climb this week according to the bankrate.com (sm) national survey of large institutions. The 30-year fixed-rate jumped 20 basis points to 7.99 percent and the 15-year fixed-rate increased 16 basis points to 7.53 percent. The 1-year adjustable rate moved up 14 basis points to 6.38 percent. A basis point is one one-hundredth of a percent. Back at the end of last year I asked a handful of experts to offer their best take on what would happen to interest rates in 1999. The general consensus seemed to be "not much with most expecting 30-year fixed mortgage rates to fluctuate a lot but not veer much above or below 7 percent. Gulp. Scary scenario for mortgage hunters What happened instead has been downright traumatic, from a mortgage hunter's perspective. After touching a low of 6.46 percent last October, the bankrate.com (sm) national average 30-year rate has now climbed some 150 basis points. That's an increase of 24 percent in just 10 months. The main culprit? Actually, it's the same friend that helped make things so good in the first place -- the weak global economy. As Southeast Asia started imploding in 1997 and Japan's domestic slump became worse by the day, the prices of oil, raw materials and imports plunged. That helped keep inflation in check by driving down the cost of goods and services to American consumers and businesses, even with unemployment sinking to near-record lows. But while our economists and industry professionals rightly predicted Asia's situation would improve, they didn't accurately nail down how the market here would interpret that rebound. Nor did they correctly interpret what it would mean for inflation. The market impact Let's consider the market impact first. With Asia looking better and Europe seeming to pull out of its recent funk, the United States suddenly isn't the only bastion of economic strength in the world. That means foreign stock, bond and currency markets look relatively more attractive in terms of growth potential than ours, helping to stem the tide of money flowing here from overseas. As demand for U.S. investments falls, bond yields need to start climbing in order to keep investors interested and interest rates -- such as those charged on mortgages -- rise in tow. Unfortunately, these capital market problems aren't the only ones stemming from the overseas recovery. The real economy has felt its impact, too. Remember how cheap gasoline was earlier this year? As I'm sure you know, those days are long gone. The price of oil shot up this year thanks to the increasing need for energy that long-dormant economies experience when they come back to life. Production cuts instituted by members of the Organization of the Petroleum Exporting Countries (OPEC) to bring supply more in line with demand didn't help either. As for other commodities such as metals used in manufacturing, they have become more expensive as well. Together, these factors drive up the cost of doing business for U.S. companies. But today, they're not the only ones. Because unemployment remains super low, companies can't freeze wages or take other workforce-related steps to cut their expenses. That leaves them only one option to keep the profits rolling -- raise the prices they charge you and me for their widgets. As a result, inflation begins to pick up, something government and private-sector research reports have finally started to reflect. Take a look at recent history What does all this mean for mortgage hunters? We'll get to that, but first, let's consider 1999's rate action in the context of recent history. Sure, today's 30-year fixed-rate isn't as good as last fall's. But it's less than the 8.25 percent my editor got the last time he went loan shopping in 1996. And it's a lot less than the 11.75 percent he received in the mid-'80s. Feeling better? OK, maybe not. Yet there are many options available to people who need some extra help getting into homes. Some can use all that cash they've made in the stock market these past few years to put up more money at closing in points. By doing so, they can buy down" the rate making their mortgages as cheap as they would have been earlier this year. Others might want to look at adjustable-rate mortgages or ARMs. Such loans offer lower rates and payments the first few years of the term. If all else fails you can always wait out the market and hope rates come down later this year too. After all that's what the experts said would happen right? The average monthly payment on a $100 000 30-year fixed-rate mortgage soared to $733 up $14 from last week. Payments on a $100 000 15-year loan were up to $929 an increase of $9. The bankrate.com (sm) National Index is based on a Wednesday survey of the 50 largest banks and the 50 largest thrifts in the 10 largest metropolitan areas in the country. These are averages. To find specific rates offered by lenders go to our mortgage rate search engine. DISCUSS IT ... Talk about this story or mortgages in general by participating in our message boards located at the following link: chat.bankrate.com