217k views
2 votes
In the 1980s an average mortgage rate was around 18.5 how much less per month would a 150000 30 year mortgage by today if the current rate were 5 %

User Emeka Mbah
by
8.2k points

1 Answer

3 votes

Answer:

$1516.69 per month less

Explanation:

The formula for the monthly payment A on a loan of principal P, annual rate r, for t years is ...

A = P(r/12)/(1 -(1 +r/12)^(-12t))

For the 18.5% loan, the monthly payment is ...

A = 150000(.185/12)/(1 -(1 +.185/12)^(-12·30)) ≈ 2321.92

For the 5% loan, the monthly payment is ...

A = 150000(.05/12)/(1 -(1 +.05/12)^-360) ≈ 805.23

The mortgage at 5% would be $1516.69 less per month.

User Mike Nakis
by
7.9k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories