What do these two dates have in common?
It’s the dates that 30 Year Mortgage Rates were at 4.625%
The cost of owning a home is rising and it has nothing to do with the asking price. Over the last 30 days, mortgage interest rates have begun to rise. The experts have said that they can’t stay at historic lows forever and they were right.
On November 4th, a borrower could have locked in a 30 year mortgage interest rate of 3.75% Less than 45 days later, that same rate is 4.625%, almost a full percent higher!
A buyer taking out a $200,000 mortgage at 3.75% would have had a $926.23 per month Principal & Interest payment.
The same buyer today with the same mortgage of $200,000 would pay $1,028.28 per month Principal & Interest.
That is $102.05 per month MORE – or $1,224.60 per year MORE – or $36,738 MORE over the lifetime of the mortgage.
Looking at it from a buying power stand…. If your buyer only qualified for a payment of $926.23 per month, they would have been able to finance the $200,000 mortgage back on November 4th.
Today that same buyer would qualify for almost $20,000 LESS mortgage. In other words, the increase in nearly 1% mortgage interest rates has the same effect as reducing the buying power by 10%.
Do you still have buyers on the fence? If so, the fence is getting taller… and it’s going to hurt more when your buyer jumps off!