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How Much Do Higher Rates Affect Payments?

How Much Do Higher Rates Affect Payments Panic TimeRecently, I facetiously wrote a blog about why rising rates would crash the housing market, pointing out that they actually won’t 😊.

So – because of yesterday’s blog and because rates shot up again this morning – I wanted to remind everyone of just how little rate increases of less than 1% affect someone’s payment.

1/2% Rate Increase = $150 Higher Payment For $500,000 Mortgage

The below table shows the effect of higher rates on monthly payments for a $100,000 mortgage.

A 1/2% increase in rates results in an increased payment of about $27 to $30 per month (higher rates result in higher payment increases).

NOTE: I am using a $100,000 balance because it makes the math easy for estimating the effect of higher rates on larger mortgages, e.g. A $200,000 mortgage will see 2 x $30 (worst case) per month increase if rates go up 1/2%; a $350,000 mortgage will see a 3.5 x $30 per month increase; a $600,000 mortgage will see a 6 x $30 per month increase, and so on.

For a $500,000 mortgage, a 1/2% increase in rates results in about a $150 per month increase (worst case) in payment.

A $1 million mortgage would see about a $300 per month increase.

So – is it time to panic?

Probably not. 😊

Annual Percentage Rate (APR)Monthly Payment (15 Year)Monthly Payment (30 Year)
3.00%$690.58$421.60
3.25%$702.67$435.21
3.50%$714.88$449.04
3.75%$727.22$463.12
4.00%$739.69$477.42
4.25%$752.28$491.94
4.50%$764.99$506.69
4.75%$777.83$521.65
5.00%$790.79$536.82

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167

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