Interest rates are always an important topic to my buyers and sellers. Today is an amazing time to lock into an interest rate, as rates are again at historically low levels. In 2014, we have seen rates slightly rise to around 4.25 percent, and then recently keep dropping again to very low levels.
A 30-year fixed rate starts at 3.75 percent, and a 15-year rate starts at 2.875 percent. Talking to a local lender, Bryan Rowland at State Savings Bank, he mentioned that the recent fear of a weakening global economy as well as the Ebola and ISIS scares has more people moving more money into U.S. Treasury market.
Increasing demand for U.S. Treasuries decreases mortgage interest rates. Most would not have expected mortgage rates to fall under 4 percent again this year. Wonderfully, this provides buyers with opportunity to purchase a home for significantly lower monthly payments then we could see in six months to a year from now.
For example, the average new construction price this year is $315,000. With today’s interest rate of 3.75 percent your interest and principal payment would be $1,390. If interest rates rise by 1 percentage point, now for the same payment you can only afford a $280,000 house. So you just lost $34,000 in affordability.
Please contact me for more information on interest rates and your real estate needs.