Free Falling: What Tumbling Rates on Fixed-Rate Mortgages Mean For People Buying NYC Apartments

MortgageWe're a NYC condominium blog here at New Construction Manhattan, which means that we spend much of our time and nearly all of our pixels covering -- wait for it -- NYC condominiums. Which is cool by us, certainly, given that NYC condos are kind of our thing, but also means that we've been glossing over what is one of the biggest stories in NYC real estate, as well as in real estate across the country. Namely, that would be the tumbling rates on 30-year fixed-rate mortgages, which -- unless you're Alex Rodriguez, Mark Zuckerberg or someone who keeps several million dollars in cash on hand -- is what just about everyone who buys a NYC condominium will be signing on for after finding the Manhattan apartment of his or her dreams. Nearly every day brings news of a decline in the rates on a 30-year fixed-rate mortgage, to the point where it's difficult to keep up. When the Wall Street Journal wrote back in August about the historic lows in mortgage rates, it was a big deal; when those historic lows had dropped nearly another tenth of a point two weeks later, though, it was hardly a surprise.Today the interest rate on a 30-year fixed-rate mortgage, per Wells Fargo, is 4.375% -- the lowest rate since Freddie Mac started tracking those figures 40 years ago. In short, mortgage rates are, have been, and show signs that they will continue to fall through the floor. Again, it's a big story. But what does it mean for you, if you're looking to buy a NYC condominium? The short takeaway is that falling mortgage rates are good news for home-buyers in New York City and elsewhere. The context, though, is what seals it -- new Federal Reserve rules protecting consumers from the junkiest of the junky mortgage-generation practices that contributed to the subprime bust are good news, of course, both for would-be home-buyers and everyone else. And while, as we've reported, prices are rising somewhat on Manhattan apartments, they're still low relative to their peak just a couple years ago -- there's still a lot more value in Manhattan luxury condominium listings than the apartment prices reflect. And while the increasing consolidation of the lending industry is kind of worrying in a broad sense, sites like still allow home-buyers to shop for more appealing mortgages if the big dogs won't offer the right rates. More to the point, though, those fractions of percentages can add up to huge savings over the course of a mortgage. "The difference between 4.375% -- today's current 30 yr fixed rate up to $729,000 -- and 6.75%, which was the rate for similarly sized loan 18 months ago, is $391,856 over the 30 year life of the loan." Wells Fargo's Scott van der Marck told us. "This ain't 'cappuccino money,' rather it reflects a lifetime of savings for some." Even if you're a double espresso type, the guy is right -- on a big purchase like a NYC condominium, those small differences can add up to large amounts of money. Which means that the dramatic dips in the interest rates on 30-year fixed-rate mortgages can add up to some very dramatic, very interesting savings for prospective home buyers. It can be hard to find a bright side of our dark economic days, sometimes, but -- for home-buyers, at least -- this is one. Working with the right real estate agent -- one you trust, one with experience in Manhattan real estate and, at the risk of repeating ourselves, one you trust -- is one way to ensure you wind up dealing with the right lending agent. But here, at last, is the good economic news we've been waiting for -- especially if you're ready to go from searching our Manhattan condo listings to buying an actual Manhattan condo.

NYC Daily Real Estate Blog