Minneapolis, 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.
This quick jump does phycological 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 increase.
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 more. Stinks, but not a deal killer. 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!
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Joe Metzler is a Senior Mortgage Loan Officer for Minnesota based Mortgages Unlimited.
He was named the 2014 Minnesota Loan Officer of the Year, and Top 150 Loan Officers in the Nation for 2010, Top 100 for 2015, and Top 300 in 2016. He provides Home Mortgage Loans in MN, WI, and SD. He can be reached at (651) 552-3681
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