The recent jump in mortgage interest rates, along with the continued rise in home prices, has increased monthly costs for homebuyers by 15 percent and reduced their purchasing power. That is an average, according to Zillow, but all real estate is local, and in some markets, the rise is even steeper.
The average rate on the popular 30-year fixed mortgage is almost a full percentage point higher today than it was a year ago. It recently crossed the 5 percent line. Home prices are up 6.5 percent from a year ago, according to Zillow, so looking nationally, monthly mortgage payments for the typical home are 15.4 percent higher than they were in August 2017. Two-thirds of that jump is from interest rates, one-third from higher prices.
For the median-priced U.S. home, $216,700 in August per Zillow, a 1 percentage point increase to the current rate translates to about $1,200 more per year in mortgage payments when home prices remain the same. Climbing home values add to that increase.