Mortgage Rates Hit Lowest Since September 2022

This is fascinating to me. So mortgage rates in Central Indiana. By the way, WRTV6 has the article. Mortgage rates in Central Indiana are under 6% for the first time since September of 2022. Now that may not sound like a big deal, but it is. I'm about to tell you about how the math works on this. For the past three and a half years, mortgage rates have been between 6% and 8%. Now we've talked about how the Fed has been cutting interest rates. That is the reason the mortgage rates have gone down, the rate at which banks can borrow money, and then not always, but sort of there's a correlation that if banks can borrow money at cheaper rate, they can lend it to you at a cheaper rate. It doesn't always happen, but that's generally the way it works. That's the way it's working right now. So a 30-year mortgage rate was last under 6%, September 8th of 2022. Now this is what's interesting. WRTV6 ran the numbers, okay? And they compared an 8% mortgage rate to a 6% mortgage rate. These numbers are incredible, how much money this actually is. Now, these numbers that I'm about to read you do not include taxes, homeowners insurance, or mortgage insurance. This is just the mortgage payment itself. So the price would be higher, right? What you pay would be much higher because you've got to factor all those things into it. This is just the payment itself. So they picked $300,000. Is the average sale price of a home in central Indiana. So they picked $300,000, nice round number. And they put 5% down. So a 30-year mortgage on $285,000 at 8% interest would cost you about $2,466 a month. So if you add a mortgage for $285,000 home at 8%, you would pay $2,466 per month. At 7%, that monthly payment drops $200, more than $200 in fact, to $2,271. And if you get to 6%, it falls to $2,083. So that 2% over the last four years, that's $400 a month. $4,800 a year, multiply that out over 30 years. What is that? That's $150,000, something like that. It's a staggering amount of money. Look, I see these and I'm one of those low mortgage people. I got in before the rates started going up. Yeah, I'm a bit of an expert in the field myself. And I see these totals and I think about what I'm paying, not exact numbers there that they're using, but not far off. And then I think about what I'm paying because of the lower, much lower rate. And it really is a bigger, it's a big problem right now. You talk to the real estate people, you talk to mortgage people. A lot of people have been stuck in their home, which we told you in 2020 was going to happen. When they were cutting those interest rates, you said, "Okay, sure, you're getting a great deal now." Because even though the price is going up with the mortgage rate cut, you're getting a great deal, but you're stuck. You're going to be stuck because one, you're going to have trouble selling that house for what you paid for it, because you played an inflated rate based on a lower mortgage. And if you sell that home and you go anywhere that involves you having to pay money, you're going to pay so much more for that money, you're probably not going to be able to do it. I've had several friends who have struggled with that, where they've made big money on their home at the house they wanted to move to, cost more money, and they couldn't do it because of the price of money. And people have largely ended up stuck in a lot of the cases, their homes, even if their families have grown, et cetera, over the past five or six years, because they can't afford to sell the house and buy one that they want because of the cost of money. So fascinating stuff, mortgage rates going down in central Indiana.