Mortgage rates are at their lowest in 15 months and this is good news for homeowners and home buyers! For home buyers, their purchasing power is increased and they can save on their monthly payment just based on the change in mortgage rate. A home buyer is in a better position — mortgage rate wise — today than anytime in the last 15 months.
For homeowners, especially those that bought or refinanced when mortgage rates were in the 2-4 percent range, one of the biggest hurdles to moving is leaving behind their low interest rate. Selling and buying a new home means that you swap a 3.75% rate for a 7+% rate. With mortgage rates declining and the accumulated equity that home owners have built over the last few years, the sell / buy situation might end up having a marginal impact on monthly costs.
Anecdotally, we’ve heard from lenders that work with our office that they have secured a 5.99% or sub-6 percent mortgage rate for a client. That is huge! Mortgage rates depend on a multiple of factors, but getting below 6 percent can make a big difference in the motivation to sell your home and purchase a replacement property, just buy your first home.
From CNBC: “Here’s a look at how 30-year monthly mortgage costs vary at different interest rates, based on a U.S. median home price of $412,300 with a 20% down payment:
- 6.35% (current): $2,052
- 7.22% (May 2024): $2,243
- 7.79% (October 2023): $2,372
Compared with the peak rate in 2023, monthly mortgage costs have declined by $320. Compared with May 2024, it’s a difference of $191.”*
Although a home in the $400K might not feel typical in California (with a median home value about double the national median home price), it is a good example of how big of an impact mortgage rates make on monthly payments.
Do you have questions about selling? Buying? Have you inherited a property or are you weighing the benefits of continuing to manage a rental property versus sell it? Reach out to us today and we’d love to talk with you about your needs.
