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Mortgage Rate Trends with Mortgage Payment Calculator

Mortgage Rate Trends with Mortgage Payment Calculator

Mortgage rates have a big impact on housing affordability and the real estate market in general. So, having a sense of how mortgage rates fluctuated in the past as well as trends for the future can put you in a better position when it comes to buying and selling real estate.

This post will look at mortgage interest rates from a historical standpoint, as well as what economists predict could happen in the next few years. In addition, there’s a convenient mortgage calculator that lets you estimate monthly payments based on current rates, down payment, as well as the mortgage term.


Mortgage Payment Calculator

This mortgage payment calculator is a quick and convenient tool for estimating your monthly mortgage payments. However, rates can vary based on current market conditions, lenders, your income situation and credit history, and other factors. This is why we also recommend talking to a licensed real estate agent who can answer any questions and give you expert advice when it comes to buying, selling, or investing in a property.


Affordability Calculator by

Historical Mortgage Rates

Mortgage interest rates peaked in the late ‘70s and early ‘80s, when they reached a staggering 18%, a figure that is almost unimaginable today. The cause was high inflation at that time, which lenders were trying to keep up with. This caused a lot of volatility in the market, which impacted both buyers and sellers, so the Federal Reserve stepped in to steady the ship.  

High interest rates mean high monthly payments for homeowners, thus housing affordability is impacted. For example, according to the investing website Value Penguin, a mortgage payment today on a $100,000 loan would be about one-third of the amount that someone would have paid in the early ‘80s.


Since the late ‘70s and early ‘80s, mortgage rates have been steadily trending downward to where they are today in the 4% range. This table from ValuePenguin shows the slow and steady decline:


Credit Score and Mortgage Rates

Just as current mortgage interest rates impact monthly payments and how much a buyer can afford, so too does a borrower’s credit score. To begin, having bad credit can  prevent a would-be buyer from even getting a home loan altogether. In general, the better your credit, the better your loan terms will be because you’re considered less of a risk to a lender.


Not only does credit score impact the interest rate you’ll pay on a home loan, it also impacts the kinds of loans you may qualify for, as well as how much you could pay for private mortgage insurance, or PMI. 


The good news is, we all have the potential to improve our credit score, but it takes time to do so. Thus, if you plan on applying for a home loan in the near future, you should give yourself as much time as possible to optimize your credit score before you apply. 


This table shows how even a small difference in interest rate can impact monthly mortgage payments: 


Mortgage Rate Trends

Is it possible to time the market in real estate? To a degree, yes you can. However, the answer to this question depends on your personal situation, such as whether you’re buying or selling a property for personal use or as an investment, as well as trending economic conditions. Nevertheless, having a sense of where mortgage interest rates could be heading is fundamental to making sound real estate decisions. 


Just as with analyzing stock prices, no one can predict 100% of the time in which direction interest rates will go. And with both of these investments, it’s not uncommon for seasoned experts to disagree. 


A recent mortgage rate prediction published by Bankrate found that as of February 2020, 50 percent of mortgage rate experts predicted that rates will rise in 2020, while 40 percent said they’d stay the same, and the other 10 percent predicted they’ll fall. This is why it’s so important to gather information from multiple sources when you’re analyzing a real estate purchase or selling decision.


When Mortgage Rates Go Up

Those who believe mortgage rates will rise say they’ll do because the U.S. economy is in good shape. They also cite a strong stock market and U.S. Treasury yields that are on the rise. In general, when the economy is strong, those who are bullish on economic conditions say that mortgage rates could be on the rise as well.


When interest rates are on the rise, would-be homebuyers may feel a stronger sense of urgency to pull the trigger now and lock in favorable rates vs. waiting and paying more later. By the same token, property owners who have been thinking of selling may decide to sell sooner rather than later, for fear that there will be a smaller pool of potential buyers once rates increase.

How Steady Mortgage Rates Impact the Market

While some investors crave volatility to cease on unusual opportunities, for the most part, investors, businesses, and even consumers crave financial stability and predictability. When mortgage interest rates are expected to remain relatively stable, people have more confidence in the market and the decisions they’re making.


When Mortgage Rates Go Down

When mortgage interest rates go down, or are predicted to drop, would-be homeowners may come out of the woodwork because buying real estate is now more affordable. This is why the strong economic recovery we’ve experienced since the Great Recession of ‘08 has gone hand-in-hand with historically low interest rates. In general, giving people access to less expensive capital helps to spur economic activity, and this includes purchasing real estate.


Mortgage interest rates are essentially the cost of money when it comes to buying real estate. And as with so many other goods, if there’s a deal on the table, it spells opportunity and can spur interest. The key is to weigh the upside of jumping in now vs. waiting it out, or not jumping in at all. 


Work with the Local Experts in Real Estate and Property Management

Intempus Property Management has been serving satisfied property owners, tenants, real estate investors, and buyers and sellers for nearly two decades. We pride ourselves in giving our clients the highest level of service so they can get the utmost from their local housing market. So, whether you’re looking to buy, sell, or rent a property, contact us. One of our team members will be happy to talk with you and answer any questions you have!



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