Rising Interest Rates And Affordable Payments?

With rising interest rates, are affordable monthly payments still in the cards?

If you turn on the news, the top stories continue to stoke fears about the increase in the prime lending rate and the speculation about what that is all going to mean for borrowers.

Why is there so much negative talk about rising rates?  Likely because it makes for the scariest headlines and those tend to grab the most attention.

But what no-one is talking about is payments.  Just how much difference does a rising interest rate make when it comes to what borrowers are actually having to pay each month?  We’ll limit our discussion to private mortgages for now.

Here’s an example:

•  If you had a private mortgage a year ago when rates were near their lowest, you may have been offered a rate of 7.9%.  Today the rate offered on that same deal would probably be closer to 9.75%.
• If we apply that to a $300,000.00 mortgage with a 30-year amortization, we get a payment of $2,180.42 at 7.9% versus a payment of $2,577.46 at 9.75%.  That’s a difference of $397.04 per month or about $12 per day.

Is it more money?  Definitely.

Is affordable?  Depends on the borrower.

Is the sky falling like the headlines would have you believe?  Maybe not.

When you have clients struggling with rising interest rates and have questions, make sure to contact the experts at Kokanee Mortgage.  We’re here to help find solutions.