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See what's happening with home values in more than 400 metropolitan areas with HSH's Home Value Tracker, just updated though the second quarter of 2022.

See what's happening with home values in more than 400 metropolitan areas with HSH's Home Value Tracker, just updated though the second quarter of 2022.

Do record-low mortgage rates matter today?

If you are wondering whether the today’s low mortgage rates make a difference, consider this: a 1 percent increase in your mortgage interest rate is the equivalent of a 9 percent increase in the price of the home you are trying to buy.

In other words, a mortgage rate increase from 5 percent to 6 percent would raise your monthly principal and interest payments by the same amount as a price jump on a $200,000 home to $218,000 home.

You can also look at it this way: a 1 percent increase in the mortgage rate decreases your buying power substantially. For example, a borrower with an income of $3,850 per month (with no debts) might qualify for a $200,000 loan at 5 percent, but only about $180,000 at 6 percent.

Today’s mortgage rates are hovering below 5 percent, and an increase of as little as 1 percent can make a big difference not only in what you pay but also in the amount of money you can borrow.

Current rates matter most

When you are applying for a home loan, regardless of whether you are buying your first or refinancing your existing home, it is important to track mortgage rates so you can lock in a low rate.

Following trends in mortgage rates can give you a point of reference so you can compare loan products, but for borrowers, the most important numbers are mortgage rates today and predictions about where mortgage rates are headed.

Ask the expert
Keith Gumbinger
Keith Gumbinger
Mortgage Expert
Vice President, HSH.com
About Keith: Mortgage market observer and analyst with 35 years experience... (more)
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Q: How are mortgage interest rates determined?
AUG 18, 2022
A:

Mortgage rates fluctuate from day to day, depending on a number of factors related to the economy and to choices made by investors. While some mortgage money comes from deposits held by banks and credit unions, most of the funds for borrowers come from investors in capital markets.

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Q: Will today's stock market influence tomorrow's mortgage rates?
AUG 16, 2022
A:

Mortgage rates are influenced by a variety of factors, rather than moving in lockstep with any one economic indicator. The stock market rises and falls for a wide variety of reasons, including global, economic and political issues, but as a broad rule of thumb, a rising stock market indicates optimism among investors about the economy.

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Q: Should I pay private mortgage insurance out of pocket or finance the cost?
AUG 12, 2022
A:

For the most part, this is a discussion about time. You should compare the total costs of the difference in the two interest rates over your given time horizon.

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