The interesting thing about home mortgage interest rates is that in reality, they are just not that interesting to most people. Financial significant, of course; mathematically important, absolutely; but most of us just don’t get that interested in a number that we have no ostensible control over, which seems to historically fluctuate between 3% and 13%.
If the price of gasoline were to rise from $4 a gallon to $6 a gallon, we would be very interested, social media would “literally” explode, and the people would take to the streets. Well at least we would expect folks to walk more, and maybe even ride their bicycles to work. But a change in the interest rate, especially for something as nebulous as a 30-year term, just does not capture much interest, but it should … and here is why.
Say you are considering purchasing a home for $300,000 in Angel Fire. Assuming a 10% down payment, with a 4% interest rate, you would be looking at about $1290 monthly payments, and a total interest of nearly $194,000. All other factors being equal, a 6% interest rate would yield monthly payments of $1619 and almost $313,000 in interest payments. Regardless of how much you drive, and even if gasoline rose to $10 a gallon, increasing interest rates of 2% on a mortgage will affect your finances more, something in the neighborhood of $119,000 more.
So then, the most interesting question in the room is, “Will mortgage interest rates increase soon?” While nobody is certain of the answer, experts in the banking, mortgage and realty sectors are predicting that indeed mortgage interest rates will move upward in 2017. But we are still an era of historically low rates. According to data gathered from Freddie Mac, the average rates over recent decades were:
• 1970’s 8.86%
• 1980’s 12.7%
• 1990’s 8.12%
• 2000’s 6.29%
So actually, the current mortgage interest rates are quite favorable. Right now may be the ideal time to purchase property in the Angel Fire area, in order to take advantage of the situation and and either save some money, or get more home for your dollar. The elk and sunsets are not going anywhere, but very low interest rates may be slowly disappearing.
If you remember the 80’s (apart from the great hair and shoulder pads!) you know that rates were brutal. People bought homes, of course, but they had to devote a larger portion of their income to housing.
Have you missed the lowest mortgage rates ever offered? Probably. But you can still get a better interest rate than you could have 10, 20, 30, or 40 years ago so now is a great time to buy.