The difference between new mortgage loan rates and the average existing mortgage is now more than 3%. According to the NY Times article A Huge Number of Homeowners Have Mortgage Rates Too Good to Give Up (gift article), this is worth the equivalent of $50,000 or $500 a month if they bought their same value of home with the new mortgage rates instead of their current ones:
Professor Fonseca estimates that locked-in rates are worth about $50,000 to the average mortgage holder. That’s roughly the additional amount people would have to spend if they swapped the existing payments left on their current mortgages for higher payments at today’s rates.
Put another way, the F.H.F.A. researchers estimate that this difference was worth about $511 a month to the average mortgage holder by the end of 2023. That’s enough to influence the decisions households make and cause shock waves in the housing market.
I’m sure this will work itself out eventually, but it is definitely interesting to see how mortgage rates have swing so wildly over the last 20 years or so. Mortgage rates are finally higher than when I bought my first house around 2007, followed by multiple refinances. The fixed 30-year mortgage is such a strange product, found in only one other country across the entire world (Denmark).
