How Low Can Mortgages Go? New Record Lows All Over Again

Zillow has reported numerous times that the mortgage rates have hit another record low, but now it is looking almost silly if you have been in the housing economy for more than a couple decades.  If you think that housing is not affordable right now, imagine if the borrowing rate on future mortgage payments suddenly rises 100 basis points or 200 basis points.  Then you have real troubles.

The report today put a 30-year mortgage at 3.34%.  The 15-year is even much lower down all the way at only 2.74%.  The rate for a 5-1 ARM (Adjustable-Rate Mortgage) is only 2.44%.

If you want to see just how much money this saves you, you can go to The Mortgage Calculator to see, but keep in mind that this does not take into consideration things such as property taxes, electric bills, insurance, homeowners association fees and the like.

A $300,000 house at 3.34% for 30-years generates a principal and interest payment comes to only $1,320.48 per month.  At 4.34% that goes up to $1,491.67 per month, and at 5.34% that goes up to $1,673.37 per month.  When you get into jumbo houses above the $417,000 conforming threshold the savings at the low rates really stand out because those rates are higher.

JON C. OGG