Mortgage Interest Rates Explained: A Brief History 🏠 Should You Buy a Home? | MELANIE ❀️ TAMPA BAY


so recently I’ve been getting a lot of
questions about mortgage interest rates possibly rising on this episode of
Melanie Loves Tampa Bay I’m going to share a little perspective on that topic hey everybody Melanie Atkinson here
realtor with Smith & Associates in beautiful Tampa Bay Florida and today
I’m going to talk to you about the very riveting subject of mortgage interest
rates now don’t go to sleep yet I’m gonna try to make it interesting I
thought this was an important topic to get into as we go into 2019 because I’m
getting the question about mortgage interest rates more and more these days
we hear on the news all the time that mortgage rates are rising and people
want to know how that will affect the housing market well I wish I could whip
out my crystal ball and tell you all exactly what’s gonna happen with raids
and the housing market in the next year but that’s not something that’s possible
what I am capable of is breaking down the data and looking at mortgage
interest rates from a historical perspective and then taking that data
and showing you what your money can buy today cue the super interesting
historical chart this chart is from the Freddie Mac website and is showing with
the annual average mortgage rate for fixed-rate mortgages has been since 1972
now when I pull this data November in December 2018 had not been posted yet so
the average that you see there is for rates from January through October 2018
now there’s lots of interesting information in this chart first off it
was very expensive to borrow money in the 1980s look at those rates I have
family and I’ve worked with clients that remember paying those interest rates for
a mortgage it seems almost unbelievable that people were paying over 16 percent
for their mortgage interest rates but at that time they were and for an entire
decade the rates never averaged below 10 percent even in more recent times
say for example in 2000 rates averaged over 8% and when we saw the peak of the
housing market in the mid 2000s and Tampa rates weren’t at rock-bottom they
were in the high fives and low six percent range since then rates have
been significantly lower with the lowest average mortgage interest rate coming in
2016 at three point six five percent now yes it would have been great to lock in
a 30-year fixed-rate mortgage back when it was at its lowest in 2016 but not all
of you were ready back then don’t beat yourself up about not locking in a rate
when it was at the bottom the interest rates had to go up at some point that’s
just basic economics instead focus on how historically the interest rates that
we’re seeing today even as they creep into 5% are still very reasonable now
let’s do a little math so I can show you how your principal and interest payment
changes as mortgage rates get a little bit higher but first a very important
disclosure I am NOT a licensed mortgage broker I’m a real estate agent so if you
want specifics regarding your loan you need to talk to a licensed mortgage
broker the information I’m going to share with you I got from using an
online mortgage calculator on Zillow your total monthly mortgage payment is
typically made up of more than just principal and interest a lot of times
you’re going to have an escrow account that pays for taxes and insurance and
sometimes depending on your loan amount you’re going to have private mortgage
insurance in there as well these examples are just looking at the
principal and interest portion of the loan to get an accurate quote on a
mortgage loan please contact a licensed mortgage broker or give me a call and I
will get you in touch with a great one okay say for example you take out a two
hundred thousand dollar fixed-rate mortgage loan and your interest is at
five percent the principal and interest portion of that payment will be
approximately one thousand seventy four dollars a month if interest rates rise
to say five point five percent that same two hundred thousand dollar loan will
increase to one thousand one hundred and thirty six dollars a month that’s a
sixty two dollar a month difference if rates were then to rise to six percent
you’re looking at 1199 dollars a month for $200,000 loan that is a $125 a month
difference from the 5% rate now let’s do an example with a higher loan amount say
you’re borrowing $400,000 at 5% your principal and interest portion will be
approximately two thousand one hundred and forty-seven dollars a month at five
point five percent that same four hundred thousand dollars will cost you
two thousand two hundred and seventy one dollars a month a one hundred $24 a
month difference at six percent it will be two thousand three hundred and
ninety-eight dollars a month so just for fun let’s see what we could afford if
the interest rates were what they were back in 1981 when rates averaged 16.6
three percent for the same amount of money per month as the two hundred
thousand dollar loan at five percent which was one thousand seventy four
dollars you can afford about a seventy-five thousand dollar loan at
that 16 point six three percent that doesn’t really work with today’s prices
so let’s be glad the rates aren’t anywhere near this historical high so
should you look to buy this year even if interest rates are a little bit higher
than they have been in the past couple of years I would answer that question
with a few more questions first do you need a new home
whether it’s a move-up home or your first home secondly do you have stable
employment that allows you to afford the monthly payments and finally have you
been renting for a long time and you finally want to start taking advantages
of the tax breaks that you get when you own a home and that is a really big
point in case you didn’t realize it the mortgage interest that your pain all
year long is actually tax-deductible that is a huge advantage over renting if
the answer to any of those questions is yes then buy a house don’t let interest
rates get in your way historically they are still very low do
your research and partner up with a great real estate agent in a great
mortgage lender happy house-hunting everybody and remember if you’re looking
for a home in the Tampa Bay area give me a call I’d love to help you out thank
you so much for joining me on this episode of Melanie
loves Tampa Bay if you like this video please click the like button below or if
you’re interested in learning more about home trends real estate or life in the
Tampa Bay area please consider subscribing to this channel Melanie
loves Tampa Bay or follow me on Instagram Facebook or Twitter or check
out my website Melanie loves Tampa Bay com thank you so
much and I’ll see you next time with love Melanie you

3 thoughts on “Mortgage Interest Rates Explained: A Brief History 🏠 Should You Buy a Home? | MELANIE ❀️ TAMPA BAY

  1. If you have any questions about home mortgage interest rates – leave them here and I'll do my best to answer!

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