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Interest Rates In The Real World

Most people buying a home need a mortgage.  Nothing too surprising there.  Also not surprising is that mortgage rates fall and rise all the time.  For instance, average rates have varied from over 10% in 1990 to about 4% in 2018.  And everything in between.  In fact back in 1982 the average rate was nearly 17%! 

Given that these things bounce around all the time, what are the real world impacts for someone looking to buy a home of a half-percent change - a common occurrence?

Around $127 per month.

Really!  Take a $500,000 home.  The monthly difference in payments on a typical loan (assuming only 10% down) between a 3.5% rate and a 4% rate is a whopping $127 per month.  And with some creative loan work - there are many, many loan products available to you - even that can be eliminated to get you the same monthly payment amount.

The point is that while no one wants to spend another $127 a month if they don’t have to, informed Buyers will see that that kind of change in rates will probably not keep them from being able to move into a new home.  And you can now count yourself as someone who is informed!  Do your own loan calculations here.   And for you history buffs, Freddie Mac has interest rates going back to 1971 here.