Sean Hannity discusses how the Fed's latest rate hike is going to impact mortgage rates and everyday Americans on Wednesday night's 'Hannity.'
, especially the poor, the middle class, people on fixed incomes. Two-thirds of Americans are now living paycheck to paycheck. Sadly, rate hikes are not good for, for example, property values, to put it mildly. Let's break down what this rate hike means. For example, now, many Americans, they were getting mortgages with interest rates around 3%, some even lower in the twos.
LEAGUE CITY, TX - JUNE 16: A sold sign sits near a home site in the Magnolia Creek subdivision June 16, 2005 in League City, Texas. The U.S. Commerce Department announced on June 16 that construction of new homes rose 0.2 percent in May as the housing market, fueled by low mortgage rates, continued a boom.
At the time, I'm talking about a 30-year fixed rate. Now, if you bought a $400,000 home, let's say you put 20% down, your monthly payment on a 30-year loan would be $1,993 a month. At the end of 30 years, the total mortgage paid with interest bought a $400,000 house. It would be $485,600. Now you go a half a point or half a percent increase in interest rates. Your payment goes up by $100 and the total payment paid over 30 years goes up by $32,000. Another half a point.
That's at 4% interest. Now, prior to today, a 30-year fixed mortgage was averaging, well, 6.3 some odd percent. At that rate, your monthly payment is $500 more than it would have been in 2020. And the total amount that you would pay over the course of your loan would be $203,000. Wow. Now, today, it gets a lot worse. Rates now expected to go as high as 7.5%.
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