How the 2016 Fed Interest Rate Increase Will Affect Mortgage Payments

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Dec. 13, 2016
Prashanth Perumal
Business Insider

Rising mortgage rates after Donald Trump’s victory have not had any adverse impact on home purchases by Americans, according to Zillow Group’s mortgage analysis. Find out How the 2016 Fed Interest Rate Increase Will Affect Mortgage Payments. Zillow says this could be due to homebuyers being insensitive to interest rate hikes in an exceptionally low-rate environment, and the real estate firm’s analysts expect housing prices to go up 3.6% in 2017 even as interest rates rise.

Still, potential homebuyers, expecting further rate hikes, are increasingly looking to lock in low rates before they go up, while refinance requests have dropped significantly (32% on Zillow) since November.

The Fed hiked its key rate by 25 basis points to a range between 0.50% and 0.75% at Wednesday’s meeting. That increase is likely to have an effect on mortgage rates going forward. To that end, Zillow calculated how a rate hike this week would affect mortgage payments in 12 major US metro areas by comparing payments for a mortgage with a 4.0% rate to one with a 4.25% rate. Here are Zillow’s estimates.

How the 2016 Fed Interest Rate Increase Will Affect Mortgage Payments

1. New York, NY

Zillow Home Value Index: $398,000

Mortgage Payment at 4.0%: $1,520

Mortgage Payment at 4.25%: $1,566

Difference in Monthly Mortgage Payment: $46

Source: Zillow Group

2. Washington, DC

2. Washington, DC

Sean Pavone/Shutterstock

Zillow Home Value Index: $375,900

Mortgage Payment at 4.0%: $1,436

Mortgage Payment at 4.25%: $1,479

Difference in Monthly Mortgage Payment: $43

Source: Zillow Group

3. San Francisco, CA

Zillow Home Value Index: $821,800

Mortgage Payment at 4.0%: $3,139

Mortgage Payment at 4.25%: $3,234

Difference in Monthly Mortgage Payment: $95

Source: Zillow Group

4. San Jose, CA

4. San Jose, CA

Getty/Justin Sullivan

Zillow Home Value Index: $958,900

Mortgage Payment at 4.0%: $3,662

Mortgage Payment at 4.25%: $3,774

Difference in Monthly Mortgage Payment: $112

Source: Zillow Group

5. Los Angeles-Long Beach-Anaheim, CA

5. Los Angeles-Long Beach-Anaheim, CA

Sean Pavone/Shutterstock

Zillow Home Value Index: $584,700

Mortgage Payment at 4.0%: $2,233

Mortgage Payment at 4.25%: $2,301

Difference in Monthly Mortgage Payment: $68

Source: Zillow Group

6. Boston, MA

6. Boston, MA

Reuters/Brian Snyder

Zillow Home Value Index: $405,200

Mortgage Payment at 4.0%: $1,548

Mortgage Payment at 4.25%: $1,595

Difference in Monthly Mortgage Payment: $47

Source: Zillow Group

7. Las Vegas, NV

Zillow Home Value Index: $212,600

Mortgage Payment at 4.0%: $812

Mortgage Payment at 4.25%: $837

Difference in Monthly Mortgage Payment: $25

Source: Zillow Group

8. Miami-Fort Lauderdale, FL

8. Miami-Fort Lauderdale, FL

Shutterstock

Zillow Home Value Index: $243,800

Mortgage Payment at 4.0%: $931

Mortgage Payment at 4.25%: $959

Difference in Monthly Mortgage Payment: $28

Source: Zillow Group

9. Chicago, IL

9. Chicago, IL

Shutterstock

Zillow Home Value Index: $202,100

Mortgage Payment at 4.0%: $772

Mortgage Payment at 4.25%: $795

Difference in Monthly Mortgage Payment: $23

Source: Zillow Group

10. Seattle, WA

Zillow Home Value Index: $409,900

Mortgage Payment at 4.0%: $1,566

Mortgage Payment at 4.25%: $1,613

Difference in Monthly Mortgage Payment: $47

Source: Zillow Group

11. Houston, TX

11. Houston, TX

Scott Halleran/Getty Images

Zillow Home Value Index: $175,800

Mortgage Payment at 4.0%: $671

Mortgage Payment at 4.25%: $692

Difference in Monthly Mortgage Payment: $21

Source: Zillow Group

12. Denver, CO

12. Denver, CO

Shutterstock

Zillow Home Value Index: $350,400

Mortgage Payment at 4.0%: $1,338

Mortgage Payment at 4.25%: $1,379

Difference in Monthly Mortgage Payment: $41

Source: Zillow Group

 

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manoloandolini
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Great post !

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