Reading today about the truly incredible interest rates currently available encouraged me to spread the word here. Interest rates have been so low, for so long now, that seeing news about low rates might prompt a “great, but what is new” response. However, rates now are so incredibly low for qualified buyers that it certainly warrants attention.
Today’s Freddie Mac Survey of Lenders found that the 30-year fixed home loan rate is currently averaging 3.75% and that the 15-year fixed is at 2.97%. Historically, this is unprecedented, especially the 15-year loan being under 3%.
- Right now a $300,000, 30-year fixed loan at 3.75%, equates to a monthly principle and interest payment of $1,389. WOW.
- At this time last year, the same $300,000 loan at 5.25% cost $1,656, or $267 a month more than today.
- Five years ago at 6% you could finance $225,000 and have roughly the same payment.
- This equates to, from a cash flow perspective, a 33% increase in purchasing power – this is big stuff.
What is even more amazing is that, during the time these rates have drifted well below historical norms, home prices have dropped significantly too! It is truly a perfect storm for prospective buyers right now and the question has shifted from “should we buy now” to “which one should we buy now.”
As June has officially begun today, I will have the latest Big Bear real estate market update through May ready for you soon. Should you have questions on this or anything you see for sale here in Big Bear, I look forward to hearing from you. Until then, happy hunting.
For more information on healthy signs in the Big Bear real estate market, see my Q1 review.