What Do Low Mortgage Rates Mean to Sellers?

We often hear about low mortgage rates, but what does that really mean to you? If you are not in the market for buying a home you probably don't think twice about rates. If you are a seller mortgage rates can be as important to you as they are to a buyer.

Freddie Mac's weekly Mortgage Market Survey reported the following averages last week: 

• 30-year fixed-rate mortgages: averaged 3.55 percent, with an average 0.7 point, dropping from last week’s 3.59 percent average. A year ago at this time, 30-year rates averaged 4.12 percent.
• 15-year fixed-rate mortgages: averaged 2.86 percent, with an average 0.6 point, holding steady from last week’s average. A year ago, 15-year rates averaged 3.33 percent.
• 5-year adjustable-rate mortgages: averaged 2.75 percent, with an average 0.7 point, dropping from last week’s 2.78 percent average. Last year at this time, 5-year ARMs averaged 2.96 percent.
• 1-year ARMs: averaged 2.61 percent, with an average 0.4 point, falling from last week’s 2.63 percent average. A year ago, 1-year ARMs averaged 2.84 percent.

When a buyer starts the home buying process the first thing they do is get pre-qualified for a mortgage. The difference in monthly principal and interest on a 30 year mortgage between a 3.55% rate and a 5.55% rate is approximately $238.00 per month. That means a buyer that was pre-qualifed to buy a home for $200,000 at 3.55% can now only buy a home valued at about $158,000 at a rate of 5.55%.

The advantages for a buyer are obvious, but for a seller higher rates can mean a lower number of qualified buyers for your home. Less buyers can mean less competition, a lower sales price and longer days on market.

Low interest rates aren't just great for buyers, they increase opporunities for sellers too!