Grab a Fixed Rate Now
If you've been sitting on the home-mortgage sidelines waiting for the return of single-digit fixed rates before you buy, sell or refinance, get on your feet. Rates below 10 percent are back and they're turning adjustable-rate mortgages (ARMs) into second choices for smart-money shoppers nationwide.</br></br>Here's why: Thanks to changes in the bond markets and a voracious appetite by institutional investors for mortgage securities, rates on 30-year fixed mortgages have been sliding steadily for weeks.</br></br>Although national indexes maintained by the Federal Home Loan Mortgage Corp. (Freddie Mac) and others haven't yet dipped below the magic 10 percent line, they're close. And in major markets across the country, heavy competition is under way among aggressive lenders to woo mortgage borrowers with 9 1/2 and 9 3/4 percent fixed-rate mortgages.</br></br>Equally important: Lenders have refrained from cutting rates on the loan product that's been racking up two-thirds of their business this fall: adjustable-rate mortgages. Statistics released last week reveal that the rate gap between fixed and adjustable loans-the main reason why consumers overwhelmingly have chosen the latter in 1988-has narrowed dramatically.</br></br>The spread between 30-year fixed and one-year ARMs is now barely 2 percentage points. In August, by contrast, it was 2 3/4 points. Any time the differential gets below 2 1/4 points, mortgage experts say, consumers begin voting for fixed rates rather than adjustable.