Mortgage Interest Rates & Home Values in St. Louis
By: Tim Whitmire. 
Thankfully mortgage interest rates are still very low, but up from their lows, and homes are still reasonably priced. But you have undoubtedly heard about interest rates rising and you also have likely noticed home values increasing in your subdivision. Interest rates have increased approximately 0.75% over the last few months and according to data the Mark and Becci Real Estate Team has gathered from the MLS, values of single family homes and condos in St. Louis County, St. Louis City, and the St. Charles area have increased a combined 7.7% over the last year. Many expect both interest rates and home values to continue to increase.
Mortgage Interest Rates
Mortgage Interest rates are largely driven by economic data and reports such as jobs reports, inflation, unemployment rate, and consumer confidence. Mortgage interest rates generally increase with positive economic news and decrease with negative economic news. Other factors such as the Federal Reserve raising short term rates and the sale of mortgage backed securities play a role. Recently economic reports haven’t been excellent but have improved compared to what they had been and the Federal Reserve is expected to raise short term rates and also slow down their purchases of mortgage backed securities. Given the current environment we are in and recent trends, I expect mortgage interest rates to slowly climb throughout the next 12 months.
Home Values
My co-workers and I along with others in the mortgage industry have been very busy preparing pre-approvals for potential home buyers over the last few years and there has been a constant theme with the feedback pre-approved home buyers have shared. There is a lack of inventory of desirable homes. Homes in the hottest markets many times get multiple offers from pre-approved buyers within the first few days of being on the market. The average days on the market is down 8.1% over the last year. The simple laws of supply and demand have allowed home values to increase over the last few years and there is no sign of it slowing down any time soon.
Home Affordability
The combination of interest rates rising and home values increasing effects home affordability. With interest rates climbing and home values increasing now is a great time to purchase your first home or to move up into your next home. Consider the following scenario to illustrate what a difference a year can make when interest rates and home values are both on the rise:
January 2016 January 2017
$200,000 Purchase Price ===è 7.7% Increase in home values $215,400 Purchase Price
$190,000 Loan Amount (5% down payment) $194,398 Loan Amount (5% Down)
3.5% 30 Yr. Fixed Rate ===è .75% increase in rates 4.25% 30 Yr. Fixed Rate
$853.19 Monthly Payment + Escrows for taxes, insurance, PMI $956.33 Payment + Escrows
The same buyer purchasing the same home now has a monthly mortgage payment that is $103.13 higher than if they would have purchased the home one year sooner. Last year was a phenomenal time to purchase a home. Historically speaking mortgage interest rates are still very low but rising and homes are still affordable but values are increasing. It is still a fantastic time to buy a home and Now is the time to do it!
Licensed mortgage professionals at First Integrity Mortgage use their experience, expertise, and the special programs available to discover your goals, present multiple relevant options, and recommend the program that best meets YOUR needs!
Don’t sell yourself short. Call today to start your home buying path!
Tim Whitmire
Office phone number: 314-878-4900
Cell phone number: 314-402-8184
Email: timw@firstintegrity.com
NMLS# 279207
First Integrity Mortgage Services is a locally owned mortgage banker located at 77 West Port Plaza, Suite 200, St. Louis, MO 63146, NMSL# 276593.
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