Travis did a great job writing an offer for our clients on a beautiful home that hit the market last Monday! There were a total of 5 offers submitted by Tuesday night and ours was chosen. Obviously still seeing multiple offers and all of the offers involved financing even at the higher interest rates.
GOOD JOB TRAVIS and we are very happy for our buyers that had been trying for months to get the right home!
Now let’s take a deeper look at what mortgage interest rates have done in 2022. Please keep in mind that the numbers I share are MY estimates and may vary, especially when it comes to interest rates. The first graph below shows what has happened so far in 2022 and yes, it’s pretty brutal. Rates have more than doubled and I don’t think they are done going up. For a 30 year fixed rate conventional mortgage the rate sits at about 7.375% right now and we started 2022 at about 3.375%!! The big question is how much higher will they go? When you look at the actual cost’s associated with the rising rates, my next graph shows a roughly 55% increase since the beginning of 2022. When you consider this compared to the doubling of rates it feels a little less brutal. For a $400,000 mortgage the cost for principal & interest has increased from $1768 to $2762 per month so about $1000. WE WILL KEEP TRACKING THIS FOR SURE.
SEE BELOW FOR AN INTERESTING CASE STUDY.
Increase in 2022 Interest Rates
One of the “good” aspects of the rate increase’s is that Alaska Housing Finance Corporation can be more competitive (and that is good for Alaska!). Right now they are offering a 6.875 (compared to 7.375%) for a conventional 30 year fixed rate mortgage! They also offer other programs that can help with rates. Now, I don’t think we will see rates back in the 3% range for a long time if ever. I do think we should see rates back around the historical average of 5.5% however. Below is acomparison of the cost for principal & interest for 3 different price points at the current AHFC rate of 6.875% compared to 5.5%. For a $380,000 mortgage the additional cost is about $400 (16%). And rates inched down a bit since I put this together.
I guess my point is that things are not as bad as you hear from the news etc and buying a home can still make good sense. What is important is how your home makes you feel. If you like it, you are probably happy with the rest of your life. If not, you probably aren’t happy and should look for a change! Cheers!
Interest Rates Comparing 6.875 to 5.500%
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