Interest rates hovered around 4% for the majority of 2017, which gave many buyers relief from rising home prices and helped with affordability. In the first quarter of 2018, rates have increased from 3.95% up to 4.45% and experts predict that rates will increase even more by the end of the year.
The rate you secure greatly impacts your monthly mortgage payment and the amount you will ultimately pay for your home. Don’t let the prediction that rates will increase stop you from purchasing your dream home this year.
Let’s take a look at a historical view of interest rates over the last 45 years.
That’s a huge decrease in the rates since 1980! Many people purchasing homes today were too young to remember when we had interest rates close to 10%, let alone an almost 20% rate. To see the current rates for today, see here:
https://www.bankrate.com/finance/mortgages/current-interest-rates.aspx
But rates are expected to slowly rise throughout the year and even small increases in the rate can have a huge difference in what you pay. For instance, on a $250k loan, the difference between a rate of 4% vs 4.5% would be roughly $75 per month and over $25,000 total over the life of the loan!
Bottom Line
Be thankful that you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago. But if you are considering purchasing a home, now may be the time to do it before the rates slowly climb back up!
Be sure to check out the other posts on my blog at the link below and feel free to call or email me if you have any questions!
