As we first noted two weeks ago, while the average 30-year fixed mortgage rate had eased a few basis points to 3.93 percent, the yield on the 10-year treasury and 30-year mortgage bonds were quickly ticking up in reaction to Federal Reserve Chairman Ben Bernanke’s remarks concerning a tapering of the Fed’s Quantitative Easing program.
Over the past week, the average 30-year mortgage rate jumped to 4.46 percent, up from 3.35 percent at the beginning of May.
With 20 percent down, the average mortgage payment for a median priced home purchase in San Francisco, which was $870,000 in May, would be $3,510 per month at last week’s rates versus $3,067 at the rates of two months ago.
At 3.35 percent, an income of roughly $140,000 would have been needed to qualify for a $700,000 loan (an $870,000 purchase). At 4.46 percent, it’s closer $160,000 a year. At 5 percent, it’s $170,000 per year. And at 6 percent, call it roughly $190,000.
Looking at it another way, a monthly budget of $3,000 a month which would have covered the payments on a $680,000 mortgage two months ago would now cover the payments on a mortgage for just under $600,000, a drop from $850,000 to $750,000 in purchase price assuming 20 percent down.
Keep in mind that since 1990 the rate for a 30-year fixed mortgage rate has averaged 6.75 percent, 8.67 percent since 1971. The income needed to qualify for a $700,000 loan at 8.67 percent? That would be around $240,000 a year.
Call Jane Hopkins today to learn more! She is ready to answer your questions regarding mortgages and show you the available San Francisco real estate!