Interest Rates: The Difference a Month Makes

by Shilpi Paul

Interest Rates: The Difference a Month Makes: Figure 1

As we reported last Friday, long-term interest rates are on the rise, and may be hitting an average of 4 percent in the very near future.

While still historically low, rates have risen notably in just the last month, and so the difference in monthly mortgage payments if you bought a month ago versus today are notable. UrbanTurf wanted to take a look at just how much the rate increase impacts homeowners’ bottom lines.

Using this four-bedroom rowhouse in Mount Pleasant priced at $795,000, we took a look at the difference in monthly payments, based on varying interest rates over the last 30 days.

Let’s assume that in each case, the homeowner puts down 20 percent and takes out a loan for the remaining $636,000.

Here are the three interest rate scenarios.

May 2nd: The average mortgage rate was 3.35 percent.

Monthly Mortgage Payment: $2,802.94
Total Outlay on Mortgage (Payment x 360 months): $1,009,058.40

May 23rd: The average mortgage rate is 3.59 percent.

Monthly Mortgage Payment: $2,887.97
Total Outlay (Payment x 360 months): $1,039,669.20

June 6th: The projected average mortgage rate is 3.9 percent.

Monthly Mortgage Payment: $2,999.81
Total Outlay (Payment x 360 months): $1,079,931.60

So, the difference between a rate of 3.35 percent and 3.9 percent is about $197 a month or $70,873 over the life of the loan.

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This article originally published at http://dc.urbanturf.com/articles/blog/the_difference_a_month_makes/7153


  1. RC said at 2:51 pm on Wednesday June 5, 2013:
    I'm not sure that we're going to see 3.35 any time soon (if ever again)... but we are still range bound on interest rates and we're at the top of the range. As long as the Fed keeps buying bonds (which is going to continue well into next year if not longer, even if at a slightly slower pace than before) it's going to be extremely difficult for rates to jump much higher than where they are now. The market reaction is overdone.
  1. Robert said at 3:10 pm on Wednesday June 5, 2013:
    I recognize that if you bought your first home in the past year, rates going back above 4 percent may seem like a bit of a jolt, but keep in mind just how low these rates are from a historical perspective. June 2009: 5.6% June 1994: 8.38% Early 1980s: 16.04%
  1. jen said at 3:38 pm on Wednesday June 5, 2013:
    Well said Robert. People are freaking out about the increase. While it does make a difference, it's still not that bad. When I bought in 2007, our interest rate was 6.5%. Interest rates fluctuate. It's the nature of the beast.
  1. Jim said at 12:17 am on Thursday June 6, 2013:
    All true; but these rates are for excellent credit on a 20% down loan. Let's say you have "decent" credit and only putting down 5-10% on a condo. Your rate today is 4.5-4.625%

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