Best financial moves to make: Mortgages

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Here’s how the Fed’s latest announcement will affect mortgage rates.

Fixed-rate mortgages:
Rates for long-term home loans have remained below 6 percent since mid-January. In’s weekly index of mortgage rates offered by large lenders, the average 30-year rate was 5.35 percent on June 18.

Mortgage rates don’t always move in the same direction as the short-term rates that the Fed sets. Instead, mortgage rates tend to follow the broad ups and downs of Treasury yields, which have remained under 4 percent for five months. That is very low.

Best move now:
Long-term rates are extremely low. They might drop further, but then again, they might not. If you lock in a rate you feel comfortable with now, you might fret a little if rates drop even lower. On the other hand, you probably will feel satisfied in a couple of years, when rates are higher.

Try the mortgage rate search to locate the best deal.

The 15 fixed-rate mortgage averaged 4.75 percent June 18 in the survey of national lenders.

Adjustable-rate mortgages:
ARM rates tend to follow changes in short-term rates, such as the yields on short-term Treasury bills and notes. Those yields had been falling gradually in anticipation of another Fed rate cut.

Best move now:
Someone who plans to live in a house for five years or less might want to consider a short-term ARM because rates are so low. One-year ARMs averaged 3.74 percent June 18 in the national weekly survey, and they probably will head lower. Search for the best ARM rates in your area.

Keep in mind that fixed rates are low by historical standards. Borrowers with a longer-term horizon should lock in a low rate for 15 or 30 years.

Search for the best ARM rates in your area.