Mortgage Rate Alert for Home Buyers

Mortgage rates moved up about 3.5% over the last week from 5.8% to 5.99%. If you are in the market for a new home or condo, or considering a purchase in the near future, you should be paying attention to the rates.

We track interest rates and other key information about Daytona Beach homes and condos weekly on my website. You can see the latest version at Daytona Beach Real Estate Market Report.

There is no reason to panic. The cost of a 0.2% increase is less than $8 per month per $100,000 borrowed. However, we believe that significant inflationary pressures are in place in the US economy. The economy is still the strongest in the world, but with high government borrowing and a weakening dollar, we may see more inflation in the next two years than we’ve seen in the last decade. We wrote a post a while back, Daytona Beach Home Buyers - Remember 1980s Interest Rates, outlining some of our concerns.

Please understand that this is a short-term trend. We are calling attention because it’s quite a jump for a one week period. If you finance $200,000 and you keep the home for five years, your will pay $131.50 more per month if the rate goes for 6% to 7%. That’s $7,890 more that you would pay. We point this out because you may lost money waiting for price to drop if mortgage rates are increasing.

That’s the challenge. If you are expecting prices to drop further, watch interest rates and calculate the affect. Go here to access our Mortgage Calculator.

Home buyers are still in the driver’s seat in this market, but to get the best long-term appreciation, you will need to buy low and hold to the next boom, and yes there will be a next boom if your market is like Daytona Beach. Look at the total cost of owning that new property for 5-7 years. Mortgage rates are much more important when considering in this way.

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