While mortgage rates have been increasing the last few months, they are currently historically low compared with the trend over the last four decades, per Freddie Mac.
However rates as low as they were in November 2012– when the 30-year fixed-rate mortgage got to an all-time low of 3.31 percent– aren’t probably to return any time soon, the mortgage giant says. Currently, Freddie ensures borrowers that the all-time record high of 18.63 percent reached in October 1981 isn’t on the horizon also. (At 18.63 percent, monthly mortgage payments on a $200,000 loan would be $3,117, compared to $992 a month at today’s 4.32 percent average.).
With mortgage rates at 4.32 percent, 123 of the 157 metros that Freddie Mac tracks stay very affordable to homes earning the median income. In order for affordability to be hampered in the majority of markets, rate of interest would need to hit 7 percent, according to Freddie Mac. Regions like Los Angeles has been effected more than the majority of the nation, as the properties appreciation in conjunction with the interest rates going up, has hurt the affordability.
“Stubbornly high unemployment over the last several years combined with stagnant income growth exacerbates declining affordability in a rising interest rate environment,” according to Freddie’s blog post. “More jobs and income growth would assist weaken the results of higher interest rates and make buying a home more available. While jobs and income have revealed some improvement in recent months, they remain to be challenged.”.
Mortgage Rates Through the Years.
Here’s an overview of mortgage rates the past four decades, as well as the approximate payment on a $200,000 mortgage and how it changes with the rise and fall of rates:
Average 30-year fixed-rate mortgage: 8.86 %.
Approximate payment on a $200,000 mortgage: $1,589.
Average 30-year fixed-rate mortgage: 12.70 %.
Approximate payment on a $200,000 mortgage: $2,166.
Average 30-year fixed-rate mortgage: 8.12 %.
Approximate payment on a $200,000 mortgage: $1,484.
Average 30-year fixed-rate mortgage: 6.29 %.
Approximate payment on a $200,000 mortgage: $1,237.
Average 30-year fixed-rate mortgage: 4.36 %.
Approximate payment on a $200,000 mortgage: $997.