Today’s interest rates (near 4.25% on a 30-year fixed-rate mortgage) are still historically-low. Earlier this year, home mortgage interest rates appear to have bottomed out at just over 3.25%. But even at today’s 4.25%, interest rates are being offered at what appear to be near once-in-a-generation low levels.
Where are interest rates headed in the future? Industry experts are predicting a rise of about 1% on average by this time next year. (See the “Mortgage Rate Projections” chart for sources.)
How much of a difference will this projected rise in interest rates make, assuming these predictions are accurate? For a home mortgage amount of $250,000, the difference is $162.80 per month (see the next chart for the breakdown). Certain home buyers might not consider that number significant, but I think it’s significant.
The bottom line? Today’s 1%-lower-than-next-year-at-this-time rates are your opportunity to maximize your purchasing power, Mr. & Mrs. Home-buyer.
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