Higher Home Payments Due More To Mortgage Rates Than Prices

Abstract

Higher Home Payments Due More To Mortgage Rates Than Prices real estate agent shows a couple around a home getty real estate agent shows a couple around a home Home payments have gone way up due to higher house prices and rising mortgage interest rates. How much of the increase in payments comes from price and how much mortgage rate? It turns out that interest rates are the bigger factor, but higher prices also play a large role. In the past 12 months, 30-year fixed rate mortgages have increased from 3.0% to 5.3%. Home prices for existing houses across the country increased by 18.1% in the 12 months through April 2022. The price isn't important, as the percentage increase in monthly payments scales up or down if we use a different price. Then abother calculation can reflect higher mortgage rates and unchanged home prices. So the increase in mortgage interest rates was the bigger factor, but higher home prices also raised costs significantly. The future likely holds higher mortgage rates as the Federal Reserve continues to tighten short-term interest rates, although current long-term interest rates also reflect expected future increases in short-term rates.