Mortgage Interest rates in 2020 and 2021 hit all time lows but they are not there to stay. As of the beginning of the year in 2022, we are seeing a rise in interest rates. The Mortgage Bankers Association predicts rates to hit the 4s by the end of 2022.
Just as recent as 2018, the average 30 year interest rate was hanging out in the mid four’s, mid sixes in 2006 when real estate was surging before the crash and as high as 16.5% in the 80s.
On a $400,000 30 year fixed rate mortgage, the difference between 3.5% and 4.5% will cost an additional $230.56 or $83,000 over the life of the loan.
The good news is that when interest rates go up and affordability goes down, it tends to flood the market with more inventory which in turn could cause home prices to go down. It's simply another example of supply and demand.
