Sharp spike in mortgage rates hurting real estate sales?

Saint Paul, MN: A sharp spike in mortgage rates since the Presidential election is showing minor signs of hurting home sales.

Mortgage interest rates have jumped from around 3.625% for the weeks leading up to the election, and now are averaging about 4.125% for the best clients on a standard 30-yr fixed rate loan.images999888

This quick jump does psycological damage for anyone currently in the market who were initially quoted the lower rates. But most buyers are not going to stop looking over this rate increase, as they generally are able to financially handle this quick jump.

The loan payment on a $200,000 home at 3.625% for 30-years is $912.10 a month, but at 4.125%, the payment is now $969.30 a month, or $57.20 per month more.

Another way of looking at it, is that with the slightly higher rate, a person would need to have a $190,000 to keep the same payment as the $200,000 loan they could have gotten a few weeks ago.

The rate jump has motivated many buyers to act now, especially as predictions are for rates to move a bit higher, before leveling off again. Of course no one knows for sure, but assuming rates will go a bit higher is the smarter assumption.

First time home buyers will generally be the ones most concerned and most effected by rate increases, but should be reminded that while rates are up slightly from just a month ago, from an historical standpoint, current mortgage rates are still some of the best ever in history!

 

 


Interest Rates Post Trump Election

Interest rates post Trump election have surprised just about everyone.

It’s been a long time since anyone lender was quoting conventional conforming 30-yr fixed mortgage rates at 4% or higher for their best customers, but as of yesterday, every mortgage lender is doing so.

images999888What a difference a week makes, last Monday, the day before the election, rates averaged 3.625%.  Over the past 3 days business day (Friday the markets were closed for Veterans Day), rates have moved higher and faster than the last big 3-day move back in 1987, where rates moved higher more quickly on an outright basis.

If you were on the fence for a refinance. You just lost, and should seriously consider locking now if it even remotely still makes sense.

If you were in the market to buy a house, rates are still great, and there is no reason not to buy a home. But consider the average $230,000 home here in Minnesota will cost you $50 more per month at a 4.00% rate versus a 3.625% rate.

Why have mortgage interest rates gone up?

There are a lot of factors, but the biggest is simply the markets are feeling good about the direction of the country with the Donald Trump election. This has sparked the stock market, which has seen very nice gains. When stocks are good, mortgage rates are bad.  When stocks are bad, mortgage rates are good.

 


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