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Rising Interest Rates - A Time to Get OFF the Homebuying Fence

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Real Estate Agent

For some prospective homebuyers wondering if now is the time to buy, or instead waiting for prices to potentially dip a bit further, they could become undone by rising mortgage interest rates.

To see what a quarter or a half percent rise in interest rate can do per each thousand borrowed, check out the interest rate chart below, and do the calculations.

We have experienced a jump in interest rates the last few weeks, and the consequence of waiting further can be seen, when payments are put into this context.

Rather than waiting for potentially lower prices, homebuyers should be concerned about any payment savings from lower price, being eaten away by escalating interest rates.

AMORTIZATION TABLE - Monthly Payments (Per $1000 in Principal)

Amortization Table

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Myrl Jeffcoat ActiveRain Signature
  

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Shannon Coe
exp realty of California, Inc. - Oceanside, CA
760-586-5268, San Diego Realtor

I agree, good chart! I just told my sister about this.

Jan 02, 2011 02:06 PM
Irina Riley
American Dream Colorado - Woodland Park, CO
GRI, SFR, CNE, e-PRO, SRES

Myrl, you are right about that, but everybody's situation is different. Some people are not feeling "safe" with their jobs, so that's why they are sitting on the fence. I have seen also so many Realtors are going through either Foreclosure or Bankruptcy...

Jan 02, 2011 02:06 PM
Jack Mossman - The Nines Team at Keller Williams in Stockton
The Nines Team At Keller Williams - Stockton, CA
The Nines Team at Keller Williams in Stockton

Myrl - The "fear factor" is still a big concern for many.  BUT - there are still a lot of people out there that sold at the top of the market and are waiting for the time to move back into ownership ... for those with safety nets, the changes that might impact either price or rates .... follow the money - when bond rates far ... interest rates rise! 

Jan 02, 2011 04:06 PM
Roy Kelley
Retired - Gaithersburg, MD

Good post. Have a great month and an outstanding 2011!

 Happy New Year from your friend in Maryland!

Jan 02, 2011 10:22 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Shannon - I often think that homebuyers wait for the "bottom" of the market, and often miss it completely.  In the interim, interest rates are rising.

Jan 03, 2011 04:09 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Irina - You're absolutely right.  So much of the market is being driven (or undriven) by those fearful of losing their jobs.

Jan 03, 2011 04:10 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Jack - While I was very encouraged by the increased spending during the holiday season, many folks are suffering the "fear factor" you speak of.  A large part of getting this machine moving again depends on jobs, jobs, jobs.  I was excited to hear that manufacturing orders went up a few days ago.  That may help!

Jan 03, 2011 04:13 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Roy - I hope you have a happy, healthy and prosperous 2011. 

Jan 03, 2011 04:13 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

My old amortization books START at 6%, I think. I have an old green Chicago Title amortization book stuck in the back of a drawer somewhere. I hold on to it for fond memories of the good ol' days, LOL.

Jan 03, 2011 10:13 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Elizabeth - I have the following one that provides rates between 6% and 10%.  I still have an amortization table dating back to 1981, when interest rates were 18 1/2%.  Who could have dreamed back then, that we would ever have the interest rates we do today!

The table below provides monthly payments for interest rates of 6% through 10% (Per $1000 in Principle)

-------------Years------------  

%

5 years

10 years

15 years

20 years

25 years

30 year

6

19.33

11.10

8.44

7.16

6.44

6.00

6.125

19.39

11.16

8.51

7.24

6.52

6.08

6.25

19.45

11.23

8.57

7.31

6.60

6.16

6.375

19.51

11.29

8.64

7.38

6.67

6.24

6.50

19.57

11.35

8.71

7.46

6.75

6.32

6.625

19.62

11.42

8.78

7.53

6.83

6.40

6.75

19.68

11.48

8.85

7.60

6.91

6.49

6.875

19.74

11.55

8.92

7.68

6.99

6.57

7

19.80

11.61

8.99

7.75

7.07

6.65

7.125

19.86

11.68

9.06

7.83

7.15

6.74

7.25

19.92

11.74

9.13

7.90

7.23

6.82

7.375

19.98

11.81

9.20

7.98

7.31

6.91

7.5

20.04

11.87

9.27

8.06

7.39

6.99

7.625

20.10

11.94

9.34

8.13

7.47

7.08

7.75

20.16

12.00

9.41

8.21

7.55

7.16

7.875

20.22

12.07

9.48

8.29

7.64

7.25

8

20.28

12.13

9.56

8.36

7.72

7.34

8.125

20.34

12.20

9.63

8.44

7.80

7.42

8.25

20.40

12.27

9.70

8.52

7.88

7.51

8.375

20.46

12.33

9.77

8.60

7.97

7.60

8.5

20.52

12.40

9.85

8.68

8.05

7.69

8.625

20.58

12.47

9.92

8.76

8.14

7.78

8.75

20.64

12.53

9.99

8.84

8.22

7.87

8.875

20.70

12.60

10.07

8.92

8.31

7.96

9

20.76

12.67

10.14

9.00

8.39

8.05

9.125

20.82

12.74

10.22

9.08

8.48

8.14

9.25

20.88

12.80

10.29

9.16

8.56

8.23

9.375

20.94

12.87

10.37

9.24

8.65

8.32

9.5

21.00

12.94

10.44

9.32

8.74

8.41

9.625

21.06

13.01

10.52

9.40

8.82

8.50

9.75

21.12

13.08

10.59

9.49

8.91

8.59

9.875

21.19

13.15

10.67

9.57

9.00

8.68

10

21.25

13.22

10.75

9.65

9.09

8.78
Jan 03, 2011 10:23 AM
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Wanda - this is something I have been saying to clients for two years now! Interest rates are going to go back up again! They won't/can't stay this low forever! Nobody ever wants to believe the obvious!

Jan 04, 2011 04:19 AM
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