Freddie Mac (Federal Home Loan Mortgage Corporation) forecasted in July 2015 that interest rates would slowly rise over the next year, topping out at 5%.
As those rates rise, so do monthly house payments.
Look at more detail on the numbers.
Moving from 4.125% (where mortgage rates are today) to 4.3%, their end of 2015 prediction, may seem like an insignificant change in the monthly payment, but it might be just the beginning.
For a detached median priced home at Orange County CA, it’s only a $672 increase each year; and for the median priced condominium, it’s only a $396 increase.
Remember that interest and mortgage rates will slowly rise. As they do, before you know it, everybody will be talking about 5% interest rates as the new normal. At 5%, the detached median sales price of an Orange County home now has a monthly payment that is $284 more than today’s payment. That is a difference of $3,408 each and every year.
Locking in a mortgage rate today is like getting a free vacation every year for 30 years.
At 5%, the median sales price condominium has a monthly payment that is $170 more than today’s payment. That’s an extra $2,040, still a pretty considerable chunk of change.
By Harrison K. Long, Real estate broker, professional real estate representative, and Realtor, Orange County CA – CALBRE 01410855. Source of some information for this article is Steven Thomas and his ReportsOnHousing.com.