If you’re eyeing a new investment property, take note: Mortgage rates are on the rise. According to the Mortgage Bankers Association, the average interest rate on 30-year mortgage rates notched its highest week-over-week jump in nearly a year last week. Rates, which currently sit at 3.23%, are now at their highest point since July.
Naturally, if you’re considering financing a new property investment, this will mean higher costs. On a $150,000 home, for example, today’s rate would get you a monthly payment of around $650 (without tax and escrow costs). A few weeks ago, when rates sat at just 2.86%, you would have paid $620 per month.
It’s not a huge amount, of course, but over time, it could add up. Throw in what experts are saying about future rate hikes, and the news should give you pause as you gear up to make that next investment. Here’s what you need to know.
Will rates keep rising?
This week’s rate bumps aren’t isolated. They’ve been rising steadily since the start of the year, jumping from 2.86% at the beginning of January to the 3.23% we see today. Experts chalk it up to the improving economy, worries of inflation, and ever-growing coronavirus vaccinations.
“Mortgage rates have moved higher with more good news on the vaccine front and the stimulus package having passed the house and now being in the Senate to vote on,” said Melissa Cohn, executive mortgage banker at William Raveis Mortgage.
As the economy continues to improve and vaccinations get more widely distributed, it stands to reason rates will continue upward. Fortunately, according to Sam Khater, Freddie Mac’s (OTCMKTS: FMCC) chief economist, the increases probably won’t be as drastic as we’ve seen these last few weeks. He said: