Click on the player below to view the Real Estate Minute, Coldwell Banker Bain's video covering housing market news in Western Washington and the Pacific Northwest. Updated regularly, the Real Estate Minute offers insights into home price trends and factors influencing housing inventory and buyer demand throughout the region.
Over the last few years, one of the most hotly debated subjects in real estate has been the direction interest rates for home mortgages might be heading. Most experts and economists agree that low rates are an essential factor in helping the housing market toward recovery. But since the Federal Reserve began easing rates down several years ago, many have also predicted that the historically low rates we’ve become accustomed to can’t last. Some economists even predict that rates could increase by as much as one and a half percent by the end of 2011. However, those increases have not yet materialized, as mortgage rates at the beginning of June were at their lowest point this year.
But interest rates remain important, as they have a high impact on affordability. Most people are surprised when they learn how even a modest increase in rates can affect their mortgage payment.
Using the prediction of a 1.5% increase as an example, someone borrowing $300,000 for a home purchase at a rate of 4.5% would have a monthly principle and interest payment of $1,522 per month. However, if the previously mentioned increase were to bring the rate to 6%, the payment would go up to $1,800, a difference of $278.00 a month. Over the course of 5 years of ownership, this rate increase would cost a homebuyer more than $22,000 in additional interest. A surprising number when compared to the seemingly modest increase in the interest rate.
That’s why your Coldwell Banker Bain broker is trained to analyze and understand all the important factors related to affordability, not just the price of the home. If you’d like the advantage of this knowledge when considering your real estate needs, why not contact your broker today? He or she will give you the information you need to make an informed decision, without bias and always without obligation.
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