This was one of the top news stories this week in Mortgage News Daily and many other news publications and broadcasts. I find this comical since mortgage interest rates have been at historic lows for several years and are still close to historic lows!
This “terrifying” interest rate rise causing these news headlines is an increase in the average 30 year fixed rate from 3.5% to 3.75%.
Let’s put this into perspective. The difference in the monthly payment for a $100,000 loan between 3.5% and 3.75% is a whopping $14. My guess is that most of us would find $14 if we vacuumed under all our car seats and sofas.
We’ve lost sight of this amazing opportunity to get a mortgage loan at historic rates and be able to lock in the rate for 30 years. Take milk for example, most of us will probably drink milk for the rest of our lives, yet we do not expect and cannot get our supermarket to agree to a fixed price for a gallon of milk for the next 30 days, much less for the next 30 years!
When we look back at the history of prices on most items, the prices have risen, not fallen. Just for comparison I “Googled” the average prices for several items and compared 1981 prices to today’s prices. Here are the results:
|Gallon of Milk||$2.20||$3.50|
|Gallon of Gas||$1.19||$3.60|
|30 Year Mortgage Rates||18.50%||$3.75%|
In 1981, 30 year Mortgage Interest Rates were between 18% and 19%! Now that’s a terrifying interest rate!
This is definitely one of those times when we’re allowing the Chicken Little – “The Sky is Falling” – headlines to drown out the AMAZING NEWS that a home buyer can LOCK IN A FIXED RATE FOR 30 YEARS ON A MORTGAGE TO BUY ONE OF THE LARGEST PURCHASES THEY WILL MAKE IN THEIR LIFETIME!
How can we be so complacent about an opportunity so amazing that it defies logic? Of all the commodities we use and consume in our daily lives, few if any allow us to lock in a guaranteed fixed price for a long term! But we still have that amazing opportunity with mortgage rates!
Stop listening to Chicken Little and realize the opportunity!