In mid-October 2016 the average 30-year fixed mortgage rate was 3.64% and a 15-year fixed at 2.93%!
Now, post-presidential election and based on the fixed income markets belief that the economy is going to improve thus spurring further rate increases by the Federal Reserve, 30-year fixed rate mortgages are on average 4.31% and 15-year fixed at 3.56%.
For the first-time homebuyer who reads about this approximate 70 or so basis point increase in mortgage rates the immediate thought might be that a mortgage, at one point so affordable, has now become unaffordable.
Is this belief actually the case or is it based more on the emotion that if the low in the mortgage rate market had been missed, jumping in now would be the wrong thing to do?
As someone who has been around the block once or twice and seen 30-year fixed mortgage rates in 1980 well above 10% and about 7% in 1994 when I bought my home, the current level of 4.31% is most definitely affordable!
Will the increase in interest rates move some people from qualifying to not qualifying? An upward move is always going to do that but of course there are ways that an experienced mortgage originator can help you through the process.
Hypothetical Look At The Principal An Interest Payments At Various Mortgage Rates For A $500,000 Mortgage!
15-year fixed: 3.5% 4.5% 5.5%
P&I payment: $3,574.42 $3,824.97 $4,085.42
30-year fixed: 3.5% 4.5% 5.5%
P&I payment: $2,245.22 $2,533.43 $2,838.95
Bottom line? While no one wants to have to pay more than they might have been able to pay a month or two ago, the reality is that mortgage affordability is still at unprecedented levels.
Another reality is that no one can tell you with any certainty whether in a years time mortgage rates will be higher or lower.
And, while there was no urgency to pull the trigger and buy property over the last few years because it seemed as if economic growth would remain tepid and rates at historic lows, that fact may be changing.
A Mortgage Professional!
An old adage in finance is that when you don’t need to borrow lenders will be knocking at your door and, when you do need to borrow and you knock on the lenders door, often you find that there is no one home!
That’s why it behooves anyone interested in a mortgage to use a professional who has worked in every interest rate environment and has gotten loans done throughout.
One such mortgage professional is Alan Kreit of Wells Fargo Home Mortgage (NMLSR ID 690784) who helped with the mortgage rate hypotheticals in this article. Alan has been helping his clients for over 20-years and his contact information can be found below:
Private Mortgage Banker
NMLSR ID 690784
Wells Fargo Home Mortgage
150 East 42 St., 32nd Floor
New York,NY 10017
He can be reached at firstname.lastname@example.org or at 516.741.4723.Google+