Arkansas Mortgage Rates

Arkansas Mortgage rates dropped dramatically after the Federal Reserve announced that it would buy up to $500 billion of securitized home loans.

Rates on 30-year, fixed-rate, mortgages fell into the low to mid 5’s after the Fed announced Tuesday morning that it would buy up to 500 billion dollars' worth of mortgage-backed securities over the next 12-18 months. The Mortgage Bank of Arkansas had rates as low as 5.25% for a while. Last week, the Arkansas 30-year fixed averaged 6.125- 6.375%.

The rate reduction is exactly what the Fed intended: "This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally," the central bank said in its announcement.

Two years ago, the average rate on a 30-year fixed was about 6.5 percent. At that rate, the principal and interest on a two hundred thousand -dollar loan was $1,264 a month. Now, if someone borrowed $200,000 at 5.5 percent, the monthly principal and interest would be $1,104. This is a yearly savings of almost two thousand dollars. A Arkansas homeowner could make an additional mortgage payment each year with the savings thus cutting several years off of their mortgage.

The Fed's action helps not only buyers, but also homeowners with adjustable-rate mortgages who want to refinance into fixed-rate loans