Assuming home values rise, an interest rate jump from 4.1 to 5.1 percent would affect homebuyers in the DC metro area by about $186 a month, according to a Zillow analysis that looked at the potential impact of rising interest rates nationwide.
The analysis is based on predictions that mortgage rates could rise notably over the next year. Since no one is sure how much rates will rise, or over what time period, Zillow presumed a one percent increase in rates by mid-2015, and applied that figure to price forecasts in metro areas across the country. Then they determined how much a monthly payment would change. They assumed a 30-year fixed rate mortgage with a 20 percent down payment.
For a little bit of fun, the study then translated the monthly dollar figure change into lattes, pizza, tanks of gas and nights at a hotel. Here’s how the DC area shook out:
- Cost differential: $186/month
- Nights at a hotel: 1
- Tanks of gas: 3
- Large pizzas: 11
- Grande Starbucks lattes: 51
Ouch. 51 lattes a month? That comes out to 1.7 per day.
But the DC area got off much better than San Jose, California, where residents buying in mid-2015 “can expect mortgage payments to be $710 more per month than a comparable purchase in mid-2014 – about 5 nights in a hotel, more than 13 tanks of gas, 42 large Domino’s pepperoni pizzas or 195 Starbucks Grande Lattes,” according to the study.
St. Louis was affected the least. There, the price per month is expected to increase by a mere $65.
This article originally published at http://dc.urbanturf.com/articles/blog/a_mortgage_rate_jump_to_5.1_percent_would_affect_the_dc_area_by_186_a_month/8847
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