Real Estate Interest Rates Nears 12-Month Low

2018 was a bad year for mortgage interest rates.  At the start, rates were skyrocketing as the markets digested a new tax structure.  The fear was that more dollars in Americans’ pockets will cause them to spend more, which will bring inflation thus, rates rose.  Then, just as the markets digested tax reform, came the trade wars (and tariffs).  Tariffs generally increase the cost of goods domestically, which brings more inflation…and rates rose more.  But then right at the tail-end of the year, chaos ensued.

If you’ll remember, the Dow Jones was losing, and then gaining upwards of a thousand points per day!  The swings were huge.  Overall money found its way into the safety of mortgage bonds, which caused mortgage interest rates to fall.

Per Bankrate, mortgage interest rates today are only .06% higher than they were 12 months ago.; and lower than they’ve been the entirety of the past 12 months.  This is good news for homebuyers.  Many recent homeowners who may have purchased with an interest rate north of 5% who could potentially refinance to a lower rate and save some money every month.  The chart below says it all, and the summary below that brings it home to the Puget Sound Housing Market.

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What That Looks Like In Numbers

The median house price in Seattle in late October was $725,000 according to Altos Research.  According to Bankrate, the average interest rate at that time was about 5.1%.  Assume 20% down on that purchase price and a mortgage at 5.1%, and we’re left with a P&I payment of $3,149.11.  Take that same mortgage balance at today’s interest rate of 4.57%, and the P&I payment is only $2,962.95.  That’s a savings of $186.16 per month, or $2,233.92 per year, or $67,017.60 for the next 30 years.  How much additional buying power does today’s Seattle homebuyer have versus late October’s due to interest rate savings?  About $36,500.

The median house price in Bellevue in late October 2018 was about $1,550,000 according to Altos Research.  Using the same logic as above, this homebuyer would be saving $398 per month on their mortgage at today’s mortgage rates, or $4,776 per year, or $143,280 over the course of the next 30.  How much additional buying power does today’s Bellevue homebuyer have versus late October’s due to interest rate savings?  About $78,000.

The median house price in Everett was about $475,000…thus, with 20% down at 5.1% interest rate, we’re left with a P&I payment of $2,063.21.  Compare that payment to the same loan but at today’s interest rate of 4.57%, and we’re at a P&I payment of $1,941.24.  This is a $121.97 savings per month, $1,463.64 per year, or $43,909.20 per 30 years.  Again, how much extra buying power does today’s Everett homebuyer have versus the Everett homebuyer in late October?  About $24,000.

Interest Rate Check-In

Per Bankrate.com, the 30 Year Mortgage interest rate fell to 4.57% with .37 in discount and origination points.  Rates have fallen .53% since their 52-week high of 5.1%  Rates are .06% higher than the 52-week low-interest rate of 4.51%

Mortgage rates this week

The benchmark 30-year fixed-rate mortgage fell this week to 4.57% from 4.62 %, according to Bankrate’s weekly survey of large lenders. A year ago, it was 4.44%. Four weeks ago, the rate was 4.63%. The 30-year fixed-rate average for this week is 0.53% points below the 52-week high of 5.10% and is 0.06% points higher than the 52-week low of 4.51%.

The 30-year fixed mortgages in this week’s survey had an average total of 0.37 discount and origination points.

Over the past 52 weeks, the 30-year fixed has averaged 4.74%. This week’s rate is 0.17% points lower than the 52-week average.

  • The 15-year fixed-rate mortgage rose to 3.98% from 3.96%.
  • The 5/1 adjustable-rate mortgage fell to 4.22% from 4.27%.
  • The 30-year fixed-rate jumbo mortgage was flat at 4.54%.
  • At the current 30-year fixed rate, you’ll pay $510.85 each month for every $100,000 you borrow, down from $513.84 last week.
  • At the current 15-year fixed rate, you’ll pay $738.69 each month for every $100,000 you borrow, up from $737.69 last week.
  • At the current 5/1 ARM rate, you’ll pay $490.19 each month for every $100,000 you borrow, down from $493.11 last week.

Results of Bankrate.com’s weekly national survey of large lenders conducted February 6, 2019 and the effect on monthly payments for a $165,000 loan:

 

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The “Bankrate.com National Average,” or “national survey of large lenders,” is conducted weekly. The results of this survey are quoted in our weekly articles and national media outlets. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans, and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison.  https://www.bankrate.com/mortgages/analysis/

City of Seattle Stats for Single Family Residences – Updated 2.7.19

I have an inquiry into Altos Research for why there were huge jumps in the data in mid January – Between January 18th and January 25th, Altos’ charts and data have inventory rising 28.63% (or 197 homes).  This is contrary to the inventory increases during that same time period as stated in their Quartiles chart, which referenced only a 53 home jump in inventory.  Moreover, Altos has Price per Square Foot rising 9.02% while Median House Prices fell 3.26% during that same time period – Conflicting data.  I’ll keep you posted when I hear back.  

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These charts are Seattle Specific, but the Puget Sound Real Estate Market mirrors the Seattle market.


scott sheridan, scotty sheridan, scott sheridan jr, prmi, scott sheridan prmi,

Scott Sheridan is a Loan Officer with Primary Residential Mortgage, Inc.  Being in the mortgage industry for three years, Scott brings a fresh millennial flair to the industry. He is well-versed in the most modern, efficient, and convenient ways to get things done. Scott combines these skills with a genuine love of his work and recent experience in what is it like to be a first and second-time home buyer.  You can follow Scott’s weekly market updates on his PRMI Facebook Page.

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