The good newsis, interest rates HAVE NOT skyrocketed.
This guest post comes to us from our friend, Pete Green, Branch Manager at Atlantic Bay Mortgage Group.
With the onset of strong home sales, housing starts, higher import price, and other key economic factors, not to mention Federal Reserve rate increases, experts pegged 30-year rates to be in the 5% range by now.
While mortgage rates have edged slightly into the mid to high 4% range, they have proven quite resilient and are holding at historical lows. Rates were at their lowest in US history during the financial crisis of 2008. Today, rates are only about 1% above the lowest ever mark but still 12% belowthe highest mark noted in 1981.
Here are the hard facts based on exact data taken from the performance of Mortgage Backed Securities which drive fixed mortgage rates.
- Rates are currently at their best since June 27thof this year
- Aside from a low point May 2018, rates are at their lowest since mid-April
- Rates have improved from their highest point in the past in the past 12 months which was on May 16th yes improved
While the media has reported steadily increasing rates and decreased borrowing power for many home buyers. The reality is only modest rate increases or decreased borrowing and definitely not a barrier to buy and mortgage a home at this time.
In recent months fixed rates have generally increased by about .25% and roughly .50% in the past year. This equates to about $38 per month per .25 on a 250,000 loan. This is an increase in housing expense of only $456 a year per .25!
Another perspective, if you were looking to buy a $250,000 home with a typical down payment and wish that your mortgage payment to be exactly the same prior to the .25 increase, you could achieve this by decreasing the home price (or reduce new home options) by only $7,000.
The saying of the past few years is as true today as it was before now is the time to buy, even from a mortgage rate perspective.
Exhibit 1 46 year rate chart
Exhibit 2 ytd Mortgage Backed Securities Chart
We like to thank Pete for contributing this great interest rate information for our blog!
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