The federal reserve announced a 0.25% interest rate hike, with six more increases forecast. Mortgage rates have increased sharply since the beginning of March. Average 30-year fixed mortgage rates for the week ending March 3rd stood at 3.76%. Compared to 4.42% for the week ending on March 24th, buyers could see a drastic increase in home financing costs. Given a $250,000 loan, the difference in monthly payments between a loan taken now, and one taken just three weeks ago is almost $100 per month ($1255 vs $1159).
The usual disclaimer
None of the information or scenarios below are intended to be used as financial or investment advice, and none of the scenarios speak to any particular individuals scenario. Rather, the figures referenced serve only measures for the sake of discussion.
One year ago
In March of 2021, not only was the median sale price drastically lower (about $260,000), but mortgage rates were lower as well (3.17%). That shakes out to a huge difference in monthly payments. Assuming a 20% down payment, buying a home at the median sale price this time last year ($208,000 at 3.17%) would leave a buyer with a monthly payment of about $900. Buying a home at Coos Bay’s median sale price today ($260,000 at 4.42%) would mean a monthly payment of around $1,300. That would mean a difference of about $400.
Of course, the difference in monthly payments is even greater when when accounting for a more realistic down payment. The average down payment, nationwide, is about 6%. With a 6% down payment, buying a home for the median sale price in 2021 ($244,400 at 3.17%) would result in a monthly payment of about $1,050. Putting 6% down on a median Coos Bay home today ($305,500 at 4.42%) would result in a monthly mortgage payment of about $1,530; a spread of about $480.
