A simple mortgage calculation shows a loss of about 12 percent in purchasing power from a one-percentage point rise in mortgage rates. For example, a person taking out a $200,000 using a 30-year fixed rate mortgage at 3.75% rate would have faced $926 monthly payment (just on principal and interest). At 4.75%, and to keep the same monthly payment, the loan amount has to be cut to $177,500. The purchasing power has been reduced due to higher rates.
Posted on by Anil Aggarwal
This entry was posted in Buying new home.