When it comes to rates, it's all relative

Below is a chart of the 30 year fixed mortgage rates dating back to 1975.  There are a few things that jump right out at you by looking at this chart but far and away the most clear illustration is that we are still WELL below the averages.  In fact we are still very close to the all-time lows we saw just a few short years ago.  This is a critical point to make when we are talking about a recovery.  Gone are the loans that were given to people who can’t afford them.  Here to stay are the days of double checking and cross referencing!  To keep the buyers affording today’s prices, there must be low interest rates. 

As an example the same $200,000 loan at a rate of 4.5% today that costs $1,014 per month, would have cost $2,988 per month in 1982 at 18%!  That is 3 times as much per month for the same loan amount.  Think of the impact that has on the total cost of a house.  When you take those numbers and fast forward 10 years the loan from 2013 has cost $122,000 whereas the 1982 loan has cost $360,000.  Same loan amounts……VERY different situations!

We are starting to feel better about our economy in general.  House values are moving in the right direction.  Stock market has recovered to pre-2008 levels and job security isn’t as much of a hot topic as it was a year or two ago.  The markets will always be in flux.  The “bottoms” are never revealed until they are behind us.  We can only operate and make decisions using what we know today and learning from our yesterdays.

When you look objectively at all the potential times over the last 30 years to buy or sell a house, you can easily argue that right now is as good a time as any and better than most! 

If you own a home and you want to know more about your area and the direction values are going in call a Realtor©.  Invite them to tell you what your house is worth in today’s market.  If you rent and you want to know what you can afford in today’s rate environment call Fairway to get pre-approved.  It’s free, non-binding and there is no better or trusted pre-approval letter anywhere!      

Post courtesy of Zack Assarian, Loan Originiator with Fairway Independent Mortgage.