Mortgage Interest Rate Watch

When interest rates rise, it becomes more “expensive” to borrow money, and when interest rates fall, the opposite happens. The median sale price for a home in Santa Cruz County for 2021 was 265,000. To see how the interest rate effect works in the housing market. Let’s say the same $265,000, 30-year, fixed-rate mortgage would cost you about $1,227 a month at 3.75% interest rate. While it would cost about $1,265 at a 4% rate. That’s a difference of $38 a month, or $456 a year, and $13,642 over the lifetime of the loan, according to Bankrate amortization schedule calculator. If rates rise to 4.5% then you would pay $115 a month more or another $1,385 each year, and $41,565 over the loan’s lifetime.

Cause and Effect of Interest Rates

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Mortgage Costs

When you are comparing different mortgages, do your best to be sure that you’re taking into account all the factors that can influence your final costs. The lowest mortgage rate may not necessarily be the best choice. Ask lenders these questions:

  • What are costs for origination fees?

  • What are the costs for discount and origination points?

  • What fees does your rate quote include?

  • What is the annual percentage rate (APR) of the loan?

The Annual Percentage Rate (APR) is computed based on all the major costs of your loan, not just the loan amount. It usually includes points, origination fees, and other costs associated with the processing of your loan. Be sure to ask lenders which fees are included in their APRs, and try to compare APRs that include the same fees. This will help you determine the most accurate rate you would actually pay.

Lenders provide a great deal of guidance, but you make the final decision about whether you’re getting the best loan you can get. Part of taking that responsibility involves comparing interest rates. Mortgage interest rates change daily based on a number of national and international economic factors.
According to, Interest is simply the cost of borrowing money. As with any good or service in a free market economy, price ultimately boils down to supply and demand. When demand is weak, lenders charge less to part with their cash; when demand is strong, they’re able to boost the fee, aka the interest rate. 

Mortgage Interest Rates