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Interest Rates on Mortgages Are Going Up—Here’s What That Means for You

You might want to buy now and lock in a low rate, while you still can.


Mortgage rates chart

Image: Zillow


Since 2013, we’ve been in what mortgage experts might call a golden era for interest rates. They’ve steadily declined right up to November 2016, hitting record lows. And we’ve gotten comfortable with those low rates—many of us, especially first-time homebuyers, consider a 3- to 4-percent rate normal.


We don’t have to tell you that a lot changed in November. One specific thing, though, will have an immediate, direct impact on Hawai‘i’s housing market: In December, the Federal Reserve (the Fed) raised rates a quarter of a point. This is only the second rate increase we’ve seen in a decade, but it’s likely a sign that this is the end of that golden era. The Fed made it clear we should expect more rate increases in 2017.


As a result, mortgage rates have crept up from a low of 3.5 percent to 4.25 percent for a 30-year, fixed-rate loan. We asked Tim O’Leary of HomeBridge Financial Services what that means in terms of a monthly payment.


“A buyer in today’s real estate market can expect to pay an estimated $43 more per month for every $100,000 borrowed,” said O’Leary. He further simplified it for us with the following: “If you borrow $350,000 at 3.5 percent, the monthly payment would be $1,572. Borrow that same amount at 4.25 percent, and you’re now facing a monthly payment of $1,722—a difference of $150 per month, or $1,800 per year—for exactly the same property.”


So, if you’re waiting a bit to see if the market will slow down or prices will decrease, or you’re qualified to buy now but holding off while you build up your down payment, it might be time to reconsider and lock in a low rate while you can. 


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Beautiful beaches, year-round summer weather and that iconic aloha spirit are just a few reasons why we’re lucky we live Hawai‘i. It’s no secret that Hawai‘i is one of the healthiest, happiest states in the nation—or that it’s also one of the most expensive. When you pay to stay in paradise, the high cost of living can often be a challenge. The key to living well while living Hawai‘i boils down to one thing: taking charge of your finances. And it’s easier than you think.


HONOLULU Magazine is proud to partner with First Hawaiian Bank for Live Wellthy, your new money-savvy guide to living smarter, happier, and healthier. Here, we’ll cover the most essential topics—money-saving tips, travel hacks, investing and spending wisely, planning for retirement and more—to help you navigate your finances, plan for the future and make your money work for you.

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