A year ago, nobody would have seen mortgage rates at 3% as a terrifying thing. And they still shouldn’t.
So far this year, the 30-year mortgage rates were at their all-time lowest at 2.65%. They’ve been on a steady increase towards 3%, which is normal. Still, it’s good to have some perspective.
Last year, mortgage rates averaged 3.45%. August of 2020 was the last time rates were nearing 3%.
While the rates may be rising, the housing market still remains hot.
“Optimism continues as the economy slowly regains its footing, thus affecting mortgage rates,” said Kim Khater, chief economist for Freddie Mac. “Though rates continue to rise, they remain near historic lows.”
According to Bob Broeksmit, MBA president and CEO, the demand for buying a home exceeds supply this winter, especially the lower end of the market.
“Although purchase applications continue to outpace year-ago levels, activity has declined slightly in recent weeks because of a lack of inventory and the upward pressure that it is putting on home prices.”
What this means in numbers:
On a $200,000 home loan with a fixed rate for 30 years:
- At 3% interest rate = $843 in monthly payments (not including taxes, insurance, or HOA fees)
- At 4% interest rate = $955 in monthly payments (not including taxes, insurance, or HOA fees)
- At 6% interest rate = $1,199 in monthly payments (not including taxes, insurance, or HOA fees)
- At 8% interest rate = $1,468 in monthly payments (not including taxes, insurance, or HOA fees)
If you’re interested in your housing options, contact one of our community experts!