Why should home buyers care about mortgage rates going up?
Freddie Mac (Federal Home Loan Mortgage Corporation) forecasted in July 2015 that mortgage loan interest rates would slowly rise over the next year, topping out at 5%.
Monthly house payments go up when mortgage rates go up.
Look at detail on the numbers.
Moving from 4.125% (where mortgage rates are today) to 4.3%, their end of 2015 prediction, may seem like an insignificant change in the monthly payment, but it might be just the beginning.
For a detached median priced home at Orange County CA, it’s only a $672 increase each year; and for the median priced condominium, it’s only a $396 increase.
When interest and mortgage rates to up, before you know it, everybody will be talking about 5% interest rates as the new normal.
At 5%, the detached median sales price of an Orange County home now has a monthly payment that is $284 more than today’s payment. That is a difference of $3,408 each and every year.
Locking in a mortgage rate today is like getting a free vacation every year for 30 years.
At 5%, the median sales price condominium has a monthly payment that is $170 more than today’s payment. That’s an extra $2,040, still a pretty considerable chunk of change.
By Harrison K. Long, Real estate broker, professional real estate representative, and Realtor, Orange County CA – CALBRE 01410855. Source of some information for this article is ReportsOnHousing.com.
“Why Should Buyers Care that Freddie Mac Forecasts Mortgage Rates Will Go Up”