Plymouth Homes Are 10% Cheaper Now Due to Interest Rate Reductions
With the Federal Reserve’s aggressive action on interest rates, mortgage rates have fallen to under 5% for a 30 year conventional loan (under $417,000) for well qualified buyers with good credit. Here’s a link to live rates.
I ran some numbers based upon various mortgage rates. A few months ago, rates were in the 6-6.25% range. Now they can be had for under 5%. For the sake of this example, let’s look at values based upon interest rates of 6.25% vs. 5.25%.
While overall asking prices and sold prices are critical, part of the way we get to those numbers is can buyers afford the monthly payments.  With rates dropping from 6.25% to 5.25% buyers’ affordability just jumped by 8.8%. Given that the present rate decline is greater than the 1% decline I’m using in this example, buyers can now afford 10%+ more than they could just a few months ago. In essence, without even changing the price on a home, it just became 10% cheaper.
Scenarios based upon a $300,000 home with a $250,000 mortgage. Taxes will be priced in at 1.25%. That could certainly vary depending upon your city and county.
Monthly payments at 6.25% = $1,799.71
Monthly payments at 5.25% = $1,640.93
Difference in monthly payments = $158.78Â or 8.8%
To run your own scenarios, check out this mortgage calculator. I will also add the calculator to my links on the right if you’re looking for it in the future.
