It’s no secret.. Mortgage interest rates have went up in recent months.
The question is how do higher mortgage interest rates affect the housing market and new homebuyers that are buying their first home?
When I started in the mortgage business over 14 years ago the interest rates were over 7%-8%, now the rates are 5%-6% depending on what you qualify for. Even though the rates are higher than they were a few years ago they are still at a 20 year low.
Here is an example of how a 1% increase in mortgage rates will affect a person’s mortgage payment.
Financing a $100,000 home at 5% will cost you $537 per month in principle and interest.
Financing the same $100,000 home at 6% would cost you $600 per month in principle and interest.
One thing to keep in mind is that rents tends to increase over time making the cost of renting as much as the cost of buying a home in some cases.