'Can we afford it?' Interest rates are humbling OKC homebuyers

Richard Mize, Oklahoman
·2 min read

Every tick up in mortgage rates melts away home-buying power and sends borrowers' monthly payments soaring.

How much? Since rates hit their historic rock bottom, 2.65% in January 2021, monthly payments have climbed hundreds of dollars per month on the low end, and $1,000-plus on the high end. The average rate just surpassed 6% for the first time since 2008, Freddie Mac reported.

To illustrate just how much a buyer's affordability has been affected in that time, we looked at three different price points for homes, and compared expected monthly payments.

Scott Senner, senior loan originator with InterLinc Mortgage in Edmond assisted in the math, and for uniformity's sake, calculations were based on a theoretical 5% down payment at the current interest rates of 6%, and insurance and property taxes were not included.

Mortgage rates are up, sales are down: OKC's cooling housing market at a glance

Starter homes at $150,000

  • Monthly payment in January 2021: $604.45

  • Current monthly payment: $899.33

  • Difference: +$294.88 per month

  • Percent change: +49%

Move-up homes at $300,000

  • Monthly payment in January 2021: $1,208.99

  • Current monthly payment: $1,798.75

  • Difference: +$589.76

  • Percent change: +49%

Million dollar homes in the Oklahoma City metro area

Homes in this price point have to be evaluated a little differently, as rates were never below 3.25% and now are around 5.75%, Senner said. These homes often require a jumbo loan, or jumbo mortgage, which is one that exceeds the "conforming loan limit" set on mortgages eligible for purchase by Fannie Mae and Freddie Mac, which drives the mortgage market.

  • Monthly payment at the lowest jumbo rate: $4,352

  • Current monthly payment: $5,835

  • Difference: +$1,483

  • Percent change: +34%

Senior Business Writer Richard Mize has covered housing, construction, commercial real estate and related topics for the newspaper and Oklahoman.com since 1999. Contact him at rmize@oklahoman.com.

This article originally appeared on Oklahoman: As interest rates rise in OKC, how will monthly payments change?