How Do Mortgage Rates Today Compare to One Year Ago?

From the desk of Carolyn Dunlop, Senior Mortgage Specialist, Dominion Lending Centres Edge Financial...

February 26, 2009. Given recent decreases in activity in the real estate market it may be prudent to examine how falling mortgage rates are affecting potential purchases for clients today. Believe it or not it is actually much more affordale to buy a home now as opposed to one year ago.
In February 2008 the best 5 year mortgage rate was 5.79%. For a client with a $250,000 mortgage this translates to a monthly payment of $1,568 based on a 25 year amortization. Over the course of this 5 year term the client would pay interest on this mortgage of $68,026.
Compare this to today's best 5 year rate of 4.00%*. The same $250,000 mortgage will now cost the client $1,315 per month based on a 25 year amortization and will result in interest of $46,537 over 5 years. The interest savings to the client over 5 years is $68,026 - $46,537 = $21,489. But that's not all...the client also saves on the monthly payment. Payment savings are equal to $1,568-$1,315 =$253/month x 60 months = $15,180. So the total savings to the client is $21,489 + $15,180 = $36,669!!!
The remarkably low rates could also be used to help purchase a more expensive home. If the client was able to pay $1,568 per month for a $250,000 mortgage one year ago at the 5.79% rate, they could now purchase a home for $48,000 more for the same payment. With a rate of 4.00%* they now qualify for a mortgage of $298,000 at the same payment of $1,568.
Perhaps this is a bright spot in our present economy....

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