Interest Rates Are Still Low. Or Did They Go Up? Are They Down?

April 24th, 2017

Interest Rates Are Still Low. Or Did They Go Up? Are They Down?

Interest rates rose after the presidential election. The news from the bond market according to MBS Online was “Trump has advocated for greater spending on defense and infrastructure, and at the same time he proposes to cut taxes. These policies raise the prospects for increased deficits and inflation, neither of which are good for mortgage rates.”1

 

Recently rates have come back down a bit. Rates are  not near the rock bottom lows we have seen over recent years but are still quite low. Where will they go next? Who knows?! The real question is what does it mean to your costs?

 

See the following hypothetical numbers for a $400,000 mortgage2:

$400,000 @ 4% = $1,909/month (not including taxes and homeowners insurance)

$400,000 @ 5% = $2,147/month (not including taxes and homeowners insurance)

$400,000 @ 6% = $2,398/month (not including taxes and homeowners insurance)

$400,000 @ 7% = $2,661/month (not including taxes and homeowners insurance)

 

No one wants to pay 6%, for example, when we have seen 4% over recent years. People have said to me, “if rates were 6% I would simply not buy!” But, would you really consider not buying and owning a home when the mortgage interest rates would still be considered as some of the lowest rates over the last two decades.3

 

It is great to get a low interest rate, and isn’t it better to buy a home to live in, raise a family, meet the neighbors, and build a life?

 

IMPORTANT DISCLOSURES:

  1. November 2016 newsletter http://mbsquoteline.com
  2. All scenarios shown above are examples only of conforming conventional mortgages and are estimates based on example rates only for the purpose of demonstration. They should not be taken as actual representation of mortgage payments.  The examples are not representative of current interest rates or products being offered by Capital Bank, N.A. Equal Housing Lender.
  3. http://www.freddiemac.com/pmms/pmms30.htm

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.​

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