We are in an era of low mortgage rates heading into the summer of 2016 and, with home prices back to their pre-recession peak, every basis point lower helps. According to Zillow Mortgages, the 30-year fixed rate in California is currently at 3.39%, down 4 basis points from last week's average and approaching the record low rates we saw just a few years ago. This is welcome news as we head into another summer of low housing inventory and rising prices in OC and Greater Los Angeles.
This time last year mortgage rates were hovering at just over 4% and the median home price was $629,500. While those rates were still relatively low, today's lower rates could mean you're actually paying less for a median priced home today. For those curious about how that would work, I'll break this down below:
- June 2015 median home price purchase in Orange County. Based on a median home price of $629,500 and interest rates at 4%, with 20% down and 1.1% property tax comes to a total monthly payment of approximately $2981.31
- June 2016 median home price purchase in OC. Based on a median home price of $645,000 and interest rates at 3.39%, with 20% down at 1.1% property tax comes to a total monthly payment of approximately $2876.75 (or $2890.48 if you decided to stick with the same down payment amount from example 1)
While higher home prices may be discouraging, lower interest rates may have actually raised affordability for many buyers in the Orange County real estate market. Whether you're thinking of buying or refinancing, it's a good idea to speak to a mortgage professional if you believe you can benefit from today's low rates.