The Sky is not Falling

Since the beginning of the year, interest rates have risen about 0.500%. But if you look at where rates were exactly a year ago, they are only up 0.250%. For most people, the 30-Year Fixed rate is still below 4.500%.

For many who are now just getting to that stage in their life where they are considering buying their first home, I want to give you some context to where interest rates are today, versus where they historically have been. When you look at the bigger picture, mortgage rates are still excellent – by a lot!

Rate Trends

In January 2000, the average 30-Year Fixed rate was 8.150%, compared to today’s 4.250% rate. Sure we are off of the never-seen-before mid-3% rates brought on by the 2008 financial crisis, but when compared to rates your parents and grandparents received, mortgage rates today are nothing to complain about.

If you think an 8.000% mortgage is high, I will share with you that when I bought my first home back in 1989, the best deal I could find was a 1-Year Adjustable at 9.500%. That loan was offered by one of our state’s largest banks, and not some loan-shark or finance company.

Let’s now get away from graphs and history and see just how little an impact the current rise in mortgage rates will affect your monthly payment:
For Every $100,000 financed, if the rate rises 0.250%,
your monthly payment will increase:

$14.52

So don’t panic! In the coming weeks, I will share with you some statistical data as to why you should not wait to buy a home, especially here in Hawaii. I will also share with you other options to help you afford more home for a smaller monthly payment. I will also review for you if paying points to reduce your rate is a good idea or not.