30-Year Fixed Mortgage Rates 1971-2009 (yellow)
30-Year Fixed Mortgage Rates Sept – Dec 2009 (top in red)
Reproduced with the permission of Mortgage-X.com
Wish I knew the big-picture answer to that question. The short-term answer is yes, they have. Since hitting a 40-year low of 4.71% the first week of December (30-yr-fixed), Freddie Mac’s weekly published rates have risen briskly in 3 weeks to 5.05%, back to September levels.
I was inspired to write this alert this morning, on receiving a weekly e-mail of current rates from our local 1st SouthWest Bank. Their 30-year rate bottomed December 1 at 4.625% and this is the 4th week straight up, to 5.25%. That’s back to August levels in just 4 weeks. What a coal-in-the-stocking Christmas gift for home buyers.
Financial Impact is Huge
Suppose you want to buy a $240,000 home, paying $40,000 down. The difference in cost over 30 years between a $200,000 mortgage at 5% or at 7% is about $96,000. That’s based on each .25% rise in rates adding approximately $6,000 per $100,000 borrowed over 30 years.
If you’re waiting for home prices to drop further … perhaps they will. But be advised to keep one eye on interest rates. With mortgage cost increasing $96,000 on that $240,000 home with a 2% rise in interest rates, the mortgage rate is a more impactful number than the price of the home. If you wait until rates are back to 7%, you’ll be paying much more for that $240,000 home or will have to settle for a much lower priced home for the same overall cost. Pay attention to those rates!
I hate harping on interest rates so redundantly in this young blog, but it is a critical issue for home buyers that may be at or near a critical juncture. Next week I’ll switch gears and start slicing and dicing some real estate sales statistics for our local market here in Pagosa Springs – 2009 in review.
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