Rising Home Values & Interest Rates Boost Monthly Mortgage Payments
Summary
According to Tuckers analysis, a 19.9% jump in the value of a typical home, combined with an increase in 30-year fixed mortgage rates from 2.74% to 3.45% over that time, resulted in a 1-2 punch to potential homebuyers. In January 2021, a buyer purchasing the typical U.S. home worth $271,650, with a 20% down payment and a conforming, 30-year, fixed-rate mortgage at then-prevailing rates, would have expected to pay $885 a month (principal & interest only), the report said. Borrowers who put less down naturally have a higher outstanding principal balance and will incur more interest, so their payments have likely climbed even faster in the last year, according to the report. Among the nation’s 50 largest metro markets, the year-over-year change in typical monthly mortgage payments was highest in January in Austin, Texas (+59.6%), Raleigh, N.C. (+44.1%), and Phoenix (+43.1%). The inventory drought could also deepen if existing homeowners who bought or refinanced at rates below 3% decide to stay put rather than pay more in interest to trade up in today’s conditions, Tucker said.