Are home loan interest rates really that high? Things to know before buying a home in an era of rising interest rates

Are Home Loan Interest Rates Really High? What You Need to Know Before Buying a Home in a Rising Interest Rate Environment
Many people might have heard that "home loan interest rates are high right now." Is it true? And how does it affect home buyers? Let's find out.

Are home loan interest rates really going up?

• What is MRR? MRR, or Minimum Retail Rate, is the interest rate banks charge to prime retail customers, serving as the base for calculating home loan interest.
• Current MRR: As of now (September 2024), the MRR for most commercial banks is approximately 6-8%, which is higher than before.

Impact on home buyers

• Higher repayments: Higher interest rates lead to increased monthly home loan installments.
• Increased total amount to pay: If borrowing for a long term, such as 30 years, the total interest paid might even exceed the principal amount of the home.

Example
Assume you borrow 3 million baht to buy a home over 30 years.
3% interest: Monthly installment approx. 12,600 baht. Total interest paid over 30 years approx. 1.5 million baht.
6% interest: Monthly installment approx. 17,900 baht. Total interest paid over 30 years approx. 3.4 million baht.
You can see that a mere 3% increase in interest significantly raises both the monthly installment and the total interest paid.

What to do

1. Assess repayment ability: Before deciding to buy a home, calculate the installments and total amount to pay in detail to ensure it's at a level you can afford.
2. Compare interest rates: Compare offers from multiple banks. Choose the bank that offers the most suitable interest rate and terms for you.
3. Consider promotions: Some banks may have special interest rate promotions during the initial years.
4. Plan for extra payments: If you have spare money, you can make extra payments to reduce the principal and interest in the long run.

Even though home loan interest rates are currently rising, it doesn't mean you can't buy a home. You just need to plan your finances carefully and choose a loan that suits your repayment ability.

We hope this blog helps you make a decision more easily! 😊 If you have any further questions or need advice, don't hesitate to contact Proview Living!