Rising interest rates are affecting affordability when it comes to owning a home. According to the The Wall Street Journal, mortgage payments are up 13% from 2017 due to the rise in interest rates. Homeowners and potential home buyers should be paying attention to interest rate volatility.
At the beginning of April, the average interest rate on a 30-year, fixed-rate conforming mortgage was in the mid 4% range, while the average for a 30-year, fixed-rate jumbo was up to 4.6%. Interest rates are predicted to continue to climb over the next two years with a 30-year mortgage rate moving into the 5% range. The Fed recently voted to raise the federal funds rate by a .25% and have expressed the likelihood of 5-6 additional increases over the next two years.
After a steep decline in interest rates from 2006 to 2014, first time homebuyers are now experiencing their first rising interest rate environment. Baby Boomers and Gen-Xers, have experienced this before. For instance, between 2004 and 2007, interest rates rose 16 times, so this is not as big of a shock for these groups. As a matter of fact, Baby Boomers saw interest rates rise to over 18% for mortgages in the 1980’s, so the mid 4-5 % rates are still a good deal.
Knowing that interest rates have gone through hikes before might help put some minds at rest, but others will want to take action. We aren’t watching a crisis form, but rates ARE rising and will continue to do so. If you are thinking of purchasing or refinancing a home, you would be well-advised to speak with your Park Place Finance loan officer regarding your financing options while rates are still near their historic lows.
The Park Place Finance team is a group of professionals with over 50 years of combined experience in the mortgage lending industry. We always strive to have your best interests in mind, providing you with personalized service from a small and dedicated team. Park Place is successful in helping people get the mortgage loan they want and need because we have strong relationships with industry leaders. Let us use our connections with REALTORS®, appraisers, inspectors, and insurance agents to make this process easy for you. Contact Park Place Finance to discuss your mortgage lending goals.