Mortgage Rates Drop Below 7% – The Impact and Benefits of Rates in The 6’s

Mortgage Rates Drop December 2023

Crunching Numbers and Seizing Opportunities in a Dynamic Real Estate Landscape

In the ever-changing landscape of real estate, one factor consistently captures the attention of both homebuyers and industry experts alike: mortgage interest rates. As we currently find ourselves in an era where rates have climbed into the 6% – 8% range, prospective homebuyers are understandably scrutinizing the potential impact on their financial commitments. In this article, we’ll delve into the specifics of mortgage payments at these rates, using a $500,000 home purchase as a case study, and explore why now might be an opportune time to make a move despite the seemingly high rates.

Crunching the Numbers: 5.75% vs. 6.75% Mortgage Rates

Let’s break down the numbers by considering a $500,000 home purchase with a 20% down payment. At a mortgage interest rate of 6.75%, the monthly payment (excluding taxes and insurance) would be approximately $2,594. On the other hand, if the rate were to climb to 7.75%, the monthly payment would increase to around $2,866. That’s a difference of $272 per month.

The Impact on Homebuyers

For many, a $272 difference can significantly influence the affordability of a home. Whether it means stretching the budget or adjusting expectations, prospective buyers must carefully consider the financial implications of these interest rate nuances. And its not just monthly payment, its the total amount of interest paid as well. Let’s calculate:

  1. Scenario 1 (6.75% Mortgage Rate):
  • Monthly Payment: $2,594.39
  • Total Payments over 30 years: $2,589 * 12 payments/year * 30 years = $966,980
  • Total Interest Paid: $699,980 – $400,000 (original loan amount) = $533,980
  1. Scenario 2 (7.75% Mortgage Rate):
  • Monthly Payment: $2,865.65
  • Total Payments over 30 years: $2,865.65 * 12 payments/year * 30 years = $1,031,634
  • Total Interest Paid: $1,031,634 – $400,000 (original loan amount) = $631,634

Now, let’s find the difference in interest paid:

Difference in Interest = Total Interest in Scenario 2 − Total Interest in Scenario 1

{Difference in Interest}:  $631,634 – $533,980 = $97,654

Therefore, the difference in interest paid over 30 years between the two scenarios is $97,654. That’s almost a $100K saving to you with the rates now in the 6’s! This represents the additional cost of Scenario 2 (7.75% rate) compared to Scenario 1 (6.75% rate) in terms of interest payments over the life of the loan.

Beyond Interest Rates: Real Estate Market Trends

While mortgage rates are an important consideration, they’re just one piece of the puzzle. The current real estate market is characterized by a consistent annual growth of 5% or more. This upward trajectory means that the value of your property is likely to appreciate over time, offsetting the impact of higher interest rates on your overall investment. In our example of a home purchase at $500,000, if your purchase now, over the next year the value of your home would increase by approximately $25,000. However, if you wait to see if rates drop further you would lose that $25,000 in gained equity. Over five years, that gain in equity would be $125,000.

The Benefit of Timing

Buying a home in a market that consistently appreciates at a healthy rate can be a strategic move. Even with interest rates in the 6% range, the potential for substantial equity growth makes homeownership a wise long-term investment.


In conclusion, while mortgage interest rates may currently be in the 6% range, the broader context of a steadily appreciating real estate market paints a more optimistic picture. Seizing the opportunity to buy now, despite seemingly high rates, could prove to be a wise financial move in the long run. As always, prospective buyers are encouraged to consult with financial experts and real estate professionals to navigate the complex and dynamic housing market effectively.

I hope this gives you a clearer picture of what the recent drop in interest rates means to you. If you have questions or want to discus further, please don’t hesitate to give me a call. I can also connect you with one of my local mortgage partners if you would like to get prequalified for a mortgage. Or if you would simply like to calculate the cost of your new dream home you can use my mortgage calculator.

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About the Author

Owner/Broker of Allen Adams Realty

Bill Adams, a North Carolina native, is founder and Owner/Broker of Allen Adams Realty, a boutique agency focused on personalized real estate services. The name “Allen Adams Realty” is derived from Bill’s full given name which is William Allen Adams.

Bill, after obtaining both a real estate sales license and an appraisal license, began his real estate career in 1998 after successful careers in the racing and automotive industries. First, a concentration on real estate appraisal services allowed Bill to gain detailed knowledge and insights into the many different facets of the greater Lake Norman and Charlotte metro real estate markets. This allowed Bill to truly understand real estate values and local markets and expand into doing both appraisal and real estate sales. Then in 2004, armed with his experience, knowledge, and expertise, Bill started his own firm and called it Allen Adams Realty. In the early years of his new firm Bill continued to do both real estate appraisal and sales and then after the downturn of the market in the late 2000’s Bill has focused solely on real estate sales.

Bill strives for excellence in all aspects of his relationship with each and every client and prides himself on providing premier dedicated and personal professional service. Bill has successfully represented a wide range of clientele from international high-end luxury buyers to young families buying their first home. Through his wide reaching marketing he has also developed a large part of his business helping those buying second homes on Lake Norman or relocating to the area. Bill’s varied background and seasoned experience has made him a trusted and highly rated expert, which has been validated by being awarded multiple Five Star Professional Award for Real Estate awards. An award given to only the top 7% of real estate agents in the entire Charlotte market area.

On a personal note, Bill has lived most of his life in North Carolina and has lived in the Lake Norman area since 1997. He currently lives in the wonderful small college town of Davidson with his lovely wife Lindsey, beautiful daughter, and beloved dog. Beyond real estate, he enjoys boating on the lake, spending time with friends and family, most all things motorsports, cars, motorcycles, Panthers football, being active, hiking and exploring in the nearby mountains, vacations to the beach, traveling, as well as many other things.