June 3rd and December 13th

What do these two dates have in common?

It’s the dates that 30 Year Mortgage Rates were at 4.625%

MortgageRateRises

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!

About Les Sulgrove

Les is an Iowa native born in Des Moines and raised in the southwest Iowa town of Bridgewater. He has been a resident of Des Moines since 1982 and has been married to his wife Linda for over 35 years. Together they have 3 grown children, 7 grandchildren and make their home on Des Moines south side. He has been a licensed REALTOR® since 1990 and is Vice President at VIA Group, REALTORS®. Les is the 2011 Past President of the Des Moines Area Association of REALTORS® (DMAAR) and received the award of Salesperson of the Year by DMAAR in 2007 for his involvement and service to the Association. Additionally, he is active at the Iowa Association of REALTORS® and serves on local, state and national committees. He also owns and operates the national technology networking group CyberProfessionals. This group of real estate professionals meets twice annually across the United States to learn from each other and share new marketing ideas with heavy emphasis on current and future technologies and their use in the real estate business. Les’ hobbies include golf, photography and sarcastic humor. He and Linda spend many Saturday mornings from Spring to Fall at the Des Moines Downtown Farmers Market. He enjoys spoiling his grandchildren at every opportunity.

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