The typical mortgage payment in the United States is $664 more expensive than a year ago, an increase of almost 40%.
That’s thanks to rising house prices and rising mortgage rates, which together are pushing monthly payments up at the fastest rate ever recorded by real estate firm Redfin.
Data released Thursday by Redfin shows the monthly mortgage payment for a typical homebuyer is up 39% from a year ago. For the four weeks ending April 24, Redfin found that the monthly mortgage payment on a home with the median asking price of $404,950 was $2,349. This calculation is based on the average rate for a 30-year fixed rate mortgage, which is now 5.1%.
A year ago, when rates were just below 3% and the median asking price was 16% cheaper, the typical mortgage payment was $1,685. That’s a huge difference ($664) in just one year and the biggest spike ever in Redfin’s data, which dates back to 2015.
How rising mortgage rates affect the housing market
The spike is part of the reason homes have become unaffordable for many Americans, and it’s causing unease in the market as a whole.
“Rising mortgage rates reduce ongoing sales as buyers and sellers take a step back from the turbulent market,” Redfin chief economist Daryl Fairweather said in a blog post.
In addition to rising rates, home prices have climbed about 20% over the past year, and experts predict prices will continue to rise in 2022. Between higher prices and higher monthly payments high, it’s no wonder some people choose to wait for the market to cool before buying or selling.
Fairweather added that while the market as a whole is still fiercely competitive (thanks in part to a severe and ongoing shortage of inventory), it is still in the “early days” of the new world of 5 mortgage rates. % or more. . “The number of buyers willing to pay such high mortgage payments could evaporate by the end of the summer,” she said.
There’s already evidence that things are slowing down – at least a little. Data released earlier this week by the National Association of Realtors (NAR) shows that the pace of pending sales has slowed for five consecutive months. NAR Chief Economist Lawrence Yun blames the slowdown on rising rates which scared off some potential buyers. Ultimately, this will lead to an overall less competitive market.
“The decline in contract signings implies that multiple offers will soon dissipate and be replaced by much calmer and normalized market conditions,” Yun said in a press release.
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