The NYC Mortgage Rate Report for 6/20/2013

The NYC Mortgage Rate Report for 6/20/2013

Boom! The Fed speaks and rates pop. A quarter of a percent overnight on just the Fed hinting that their printing of money may come to an end at some point this year. Stocks drop over 200 points and worldwide markets get hit too! From a low of about 3.5% (30 Year Fixed)  in early May to today's 4.375%, rates have risen 25%. That's a huge rise in 6 weeks. Here's what that does to your borrowing power: A borrower who could afford to buy a somewhat typical NYC 2 bedroom apartment priced at $1,250,000 would put $250,000 down (20%) and borrow $1,000,000. In early May, his or her monthly mortgage payment would have been $4490. Right now, only a month later, the payment for the same loan would have risen to $4993 monthly. That's a $503 per month increase in mortgage payment, a +10% jump and it results in $180,874 in additional interest over the life of the loan. Looking at it from a different standpoint, if the borrower's income would only qualify for a monthly payment of $4490, the borrower would only be able to borrow $888,107. Assuming the borrower was still willing to put down $250,000, the most he could pay for a new apartment would drop to $1,138,107, a drop of $111,893.

So What Does This Mean?

Well, so far the rate rise hasn't affected demand. Inventory has been flying off the shelves.....And there wasn't a lot on inventory on the shelf. As rates have fallen for the last 30 years, and increase in rates tended to bring out more buyers as people wanted to lock in rates before they went higher......There was no thought that higher interest rates could bring lower real estate prices... At some point that won't be the case...So:

The NYC Mortgage Rate Report for 6/20/2013

If you are a homeowner who has considered selling your apartment at any point in the last few years, right now there is a perfect opportunity for you. The combination of still super low rates, a decided lack of inventory and hungry buyers give you a major advantage in pricing your property..... I don't think that this opportunity stays around forever. If you would like a free evaluation of the value of your home, call me at 347-878-KWNY(5969). 

Data courtesy of Zillow and Wells Fargo