What happens if interest rates go up suddenly by 2%? There will be a crash!
What happens if interest rates go up suddenly by 2%? There will be a crash!
Just because rates go up, payments do NOT double: Example:
Borrow $100,000 at 1.5 percent, 25-year amortization – payment: $400. Now rates rise by 1% to 2.5%. Your payment also rises to $448.
At 3.5 % your payment rises to $500. So even if interest rates rise by 2 full percent, your payment goes from $400 to 500. (Not double to $800!) And if rates hit 3% higher your payment clocks in at $554.
So, keep your shirt on!
