As Rates Hit Another Record Low, Chicago Housing Remains An Affordable Opportunity
January 27th, 2012 categories: Chicago Real Estate News
It’s becoming repetitive, but it’s still good news for home buyers: Mortgage interest rates hit yet another new low last week.
It once was rare for mortgage interest rates to fall to historic lows. Now it seems to happen every week. Last week was no exception. According to a feature story in the Washington Post, the average mortgage interest rate on a 30-year fixed-rate mortgage dropped to 3.88 percent last week.
Citing Freddie Mac numbers, the Post story reported that the average interest rate on a 15-year fixed-rate mortgage stood at 3.17 percent. That’s a pretty low number. Surprisingly, though, it’s not an all-time low. Just the week before, the average interest rate on a 15-year fixed-rate mortgage loan came in just a tick lower, 3.16 percent.
These low rates are important because it makes borrowing money to finance the purchase of a single-family home or condominium far more affordable. Consider this equation: If you took out a 30-year fixed-rate mortgage loan to buy a condo or single-family home in Chicago, you’d pay just more than $1,097 a month if the interest rate on that loan was 7 percent. But if the interest rate on that same loan fell to last week’s average — 3.88 percent — you’d pay just more than $776 a month.
You don’t have to be a mathematical genius to realize that this represents a significant amount of savings. The savings are especially dramatic in markets in which housing prices tend to be higher, like in Chicago neighborhoods such as Lincoln Park and Lincoln Square. When you spend more on a house, the lower your mortgage interest rate falls, the more savings you’ll realize each month.
I’ve said it before, but it bears repeating: This remains a tremendous time to buy a single-family home or condominium in Chicago. Housing prices here remain affordable, and with interest rates lower than ever, borrowing money for a mortgage loan is even more of a bargain.
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