Rates A’Climbing

Suzanne Gwilliam, Realtor

If you watch the Bloomburg Channel you surely know that the economy is booming and the investment market is giving great returns. That is really good news for your Mutual Funds, Stocks and 401ks.

What it’s not good for is Mortgage interest rates. The more the economy stabilizes and thrives, the higher the interest rates go. So unless we see another major crash in the market, we can probably wave goodbye to 4% for a very long time. We may never see the likes
of that rate again!!

Just this past month, rates have already gone up at least a quarter percent across the board and it doesn’t look like they will stop anytime soon. In a normal market, pre 2007, interest rates hovered somewhere between 6 and 7%. Since the crash, the highest I have seen a Conventional rate go is 4.125%. However, FHA & VA have definitely stayed in the 3% range.

So, how does that rate change affect a mortgage payment? Well, if you were going to lock in your rate today at 4%, on a $400,000 loan, your principal & interest would be around $1900/month. Now, if the rates were to go up to 6%, just 2 little points, that same loan amount would be almost $2400/month. That’s a $500 hike, folks. And that doesn’t take into account the fact that property values have historically gone up in Bucks and the surrounding counties, around 4% annually. So basically, what is going for $400,000 this year, will be $416,000 next year. So
tack on those 2 other interest rate percentages and things just got a whole lot scarier! And make no mistake, the prices will just keep going up, as the will the interest rates, as long as the economy stays strong.

Bottom line, if you were thinking about moving, it might be time to get off the fence and just do it because you will probably never see rates like this again!!! And as always, if you want to run numbers and just break it all down, don’t hesitate to give me a call. I’m here to help you get where you need to go!