The NYC Mortgage Rate Report for 7/2/2013
The NYC Mortgage Rate Report for 7/2/2013
Mortgage rates have ebbed back down slightly to .25%at 4.375 for a 30 year fixed mortgage. From a low of about 3.5% (30 Year Fixed) in early May to today's 4.375%, rates have risen almost a full point, or 25%. That's still a huge rise in less than 8 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, less than 2 months later, the payment for the same loan would have risen to $4993 monthly. That's a $503 per month increase in mortgage payment, more than a 11% jump and it results in $184,864 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 the monthly payment he could have gotten back in May, of $4490, the borrower would only be able to borrow $888,107 today. 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 in value. That is a very real drop as these new rates are in place for every borrower, not just out hypothetical one.
Mortgage rates have ebbed back down slightly to .25%at 4.375 for a 30 year fixed mortgage. From a low of about 3.5% (30 Year Fixed) in early May to today's 4.375%, rates have risen almost a full point, or 25%. That's still a huge rise in less than 8 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, less than 2 months later, the payment for the same loan would have risen to $4993 monthly. That's a $503 per month increase in mortgage payment, more than a 11% jump and it results in $184,864 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 the monthly payment he could have gotten back in May, of $4490, the borrower would only be able to borrow $888,107 today. 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 in value. That is a very real drop as these new rates are in place for every borrower, not just out hypothetical one.
So What Does This Mean?
Well, so far the rate rise hasn't affected demand. Inventory has been flying off the shelves..... However it would not surprise me for inventory to stop falling at the same rate and maybe even tick up as some sellers will fear that the interest rate increase may be here to stay..... I agree! As rates have generally fallen for the last 30 years, 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:
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| The NYC Mortgage Rate Report for 7/2/2013 |
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
posted by Unknown @ 8:21 AM
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