After luxuriating in the low to mid 3 percents for a while, home buyers were slammed into the mid 4 percents within the last month.
Everything has moved so quickly that it’s been hard to keep up with the fluctuating numbers. Just last week, rates dipped back to 4.29% only to ascend to 4.51% this week. The record low was 3.31% just last fall.
What this means in the real world is that the average mortgage on a $500k loan just got $75/mo. more expensive. The news is even bleaker for non-conforming borrowers with less than 20% down and FHA buyers with down payments as low as 3.5%. The increasing rate affects not only the monthly payment, but also significantly cuts into their purchasing power.
While it can be nerve wracking, it’s important to keep things in perspective. It’s still only 4.51% people! Ask your parents about the days when it was 18% or even 7% in 2005.
Tip: If it’s been more than a month since you last talked to your lender, I’d strongly recommend you check-in to understand how the higher rate impacts your loan and monthly payment. If you don’t have one, you can check with my preferred lender and all-around nice guy, Eddie Ajamian of Franklin Loan Center in Pasadena.