Weekly Special | November 13, 2023

Mortgage Rates Breach 50-Year Average

For the first time since November of 2000, mortgage interest rates pushed higher than the 50-year average. Last week’s average rate (Freddie Mac’s 30-year fixed rate weekly survey) reached 7.76%, slightly surpassing the 7.74% average recorded over the past 600 months.

The tables above demonstrate the impact of changing mortgage interest rates, which posted a market-low of 2.68% in December of 2020.

Back then, I strongly advised clients to buy as much house as they could handle, as future move-ups and move-downs would be very difficult when rates moved higher.

Somebody who chose to purchase in December of 2020 is sitting on a loan that will make it very difficult to move.

For example, $400,000 borrowed in December of 2020 to purchase a $420,000 home yielded a monthly mortgage payment (P&I) of $1,618 per month. Had that buyer chosen to wait until today, home values have appreciated 41% and interest rates have moved significantly higher (more than double).

The $420K house would now cost $592,000, and the same loan program would result in a loan of $562K with a monthly payment of $4,033!!

Thus waiting three years resulted in a payment that is 2.5 times what was required just three years ago! When you hear that home affordability is now a crisis, you can understand why.

The original one-page Weekly Special PDF is still available.