Some buyers motivated to act now as rates rise
WASHINGTON (AP) — With mortgage rates posting a big increase this week, more home buyers may decide to make the move sooner rather than later.
Mortgage buyer Freddie Mac said today that the average on a 30-year loan has jumped about a half-percentage-point to nearly 4.5 percent. It’s the highest rate since July of 2011, and the biggest increase since April of 1987.
One real estate broker and owner in Cleveland is already seeing more activity in his market. Anthony Geraci says, “People are getting off the fence a little bit more.” But he adds, “If there’s enough supply, people might sit and wait a little bit and see if the rates come down.”
Not Alex Backus. The rising rates motivated him to act two weeks ago and sign a contract on a three-bedroom house in the Seattle suburb of Edmonds. He locked in a 30-year loan at 4.125 percent. Backus says with rates starting to rise, “it seemed like now was the time to really get serious about buying a home.”
The increase in mortgage rates can mean a huge difference in the cost of a home over the life of a mortgage. A buyer who locked in a rate of 3.35 percent in early May on a $200,000 mortgage would pay $881 a month, according to Bankrate.com. Another buyer who this week gets a 4.46 percent rate would pay $1,008 a month. The difference: $127 a month, or $45,720 over the life of the loan.