Mortgage Rates: February 3, 2022

Updated: Feb 9

Mortgage rate changes for the week ending 2.3.22 were up a negligible 2bp. For a $100,000 loan, the monthly payment increased by $1.00 to $463.


Investing in yourself: About half the mortgage payment is an investmemt in yourself, such as building equity by paying down your principal balance or getting cash back because of tax benefits. In effect, this part of the payment is like taking money out of your left pocket and putting it in your right pocket.

Payments to others: On average, only about half of your mortgage payment is actually an expense going to others. This primarily pays the bank interest. This is the only part of the payment that is comparable to a rent expense.

Bottom line: When comparing rent to a mortgage payment, be sure to compare wisely. About half the mortgage payment you get to keep! Being wise about comparing a mortgage payment to rent is a smart "Stoic's Arbitrage" trade.


Fun Fact: The Latin root of "amortization" is "mort," which means "death." (like the word "mortality") So by making a payment, you are literally "killing" the loan!

 

When measured for the entire month of January, rates were up 35bp which caused the monthly payment to increase $20/month to $463 for a $100,000 loan. After-tax and amortization, the increase is $21/month or less than a dollar a day.



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