How Interest Rates Can Impact Your Monthly Housing Payments

Dated: March 3 2020

Views: 33


How Interest Rates Can Impact Your Monthly Housing Payments | MyKCM

Spring is right around the corner, so flowers are starting to bloom, and many potential homebuyers are getting ready to step into the market. If you’re thinking of buying this season, here’s how mortgage interest rates are working in your favor.

Freddie Mac explains:

If you’re in the market to buy a home, today’s average mortgage rates are something to celebrate compared to almost any year since 1971…

Mortgage rates change frequently. Over the last 45 years, they have ranged from a high of 18.63% (1981) to a low of 3.31% (2012). While it’s not likely that the average 30-year fixed mortgage rate will return to its record low, the current average rate of 3.45% is pretty close — all to your advantage.”

To put this in perspective, the following chart from the same article shows how average mortgage rates by decade have impacted the approximate monthly payment of a $200,000 home over time:How Interest Rates Can Impact Your Monthly Housing Payments | MyKCMClearly, when rates are low – like they are today – qualified buyers can benefit significantly over time.

Keep in mind, if interest rates go up, this can push many potential homebuyers out of the market. The National Association of Home Builders (NAHB) notes:

“Prospective home buyers are also adversely affected when interest rates rise. NAHB’s priced-out estimates show that, depending on the starting rate, a quarter-point increase in the rate of 3.75% on a 30-year fixed rate mortgage can price over 1.3 million U.S. households out of the market for the median-priced new home.”

Bottom Line

You certainly don’t want to be priced out of the market this year, and waiting may mean a significant change in your potential mortgage payment should rates start to rise. If your financial situation allows, now may be a great time to lock in at a low mortgage rate to benefit greatly over the lifetime of your loan.

EXIT Homevets Realty, Central Texas Real Estate Experts

Blog author image

Jose Segarra

Jose Segarra is the Broker and Owner of Homevets Realty LLC which opened in 2005 and currently has over 15 full time licensed agents. Jose has been licensed in real estate since 1994 and is con....

Latest Blog Posts

Don’t Be Fooled by Remarkable Real Estate Headlines - HOMEVETS REALTY - CENTRAL TEXAS, BELL COUNTY

Don’t be impressed by the headlines reporting year-over-year housing numbers for the next several months (data covering March, April, May, and June). The data will most likely show eye-popping

Read More

Planning to Move? You Can Still Secure a Low Mortgage Rate on Your Next Home?

This year, mortgage rates have started to slowly climb above recent record-breaking lows. Many homeowners planning to move may feel like they’ve missed the chance to score a great

Read More

Why This Is a Great Year to Sell Your Vacation Home! - HOMEVETS REALTY - We Got You Central Texas!!

As vaccines are administered and travel resumes, many of us are beginning to plan for those long-awaited vacations we missed out on over the past year. Some households are focusing their efforts on

Read More

How Much Time Do You Need To Save for a Down Payment? - HOMEVETS REALTY - Your Real Estate Veterans

One of the biggest hurdles homebuyers face is saving for a down payment. As you’re budgeting and planning for your home purchase, you’ll want to understand how much you’ll need to

Read More