Average Mortgage Payments Have Risen 90% In 3 Years. This Due To 20-Year High Interest Rates, Skyrocketing Values And Post Pandemic Inflation
Real estate experts say average mortgage payments have risen 90% since December 2020. They’re telling potential homeowners to buy now because housing cost will continue to rise.
They attribute the increase of costs to 20-year high interest rates, record high values and post-Covid inflation. As a result, homeownership is becoming a pipe dream to most Americans.
Analysis even suggests it makes more financial sense to rent than buy. Experts say the average new leases working out $1,000 cheaper per month than home loans.
But despite the doom and gloom, experts are urging potential buyers to stop waiting and buy now.
Average monthly payments on a new home rose to $3,322 in the third quarter of the year. In December 2020, payments only averaged $1,746.
The analysis is based on the cost of a $430,000 home with a 30-year mortgage and a 10% down payment.
Mortgages have been pushed up by the Federal Reserve’s aggressive campaign to hike interest rates from near-zero in April 2020 to a 22-year high of between 5.25 and 5.5 percent.
The Federal Reserve raised interest rates in an attempt to tame red-hot inflation. The hope was this would curb consumer spending and bring prices back into check.
Experts Say There Is Some Relief On The Horizon
The Fed was able to bring inflation down to an annual rate of 3.2%. This has allowed the Fed to hold rates steady for two consecutive meetings since July.
As a result, mortgages have also finally started to fall. The latest data from Freddie Mac shows the average rate on a 30-year fixed-rate mortgage fell to 7.03%.
But today a Bank of America (BofA) executive Matt Vernon warned homebuyers not to keep waiting to see how low rates can go.
Similarly, a recent report by warned there would not be a major breakthrough in the housing market next year. However, prices would ease slightly.
Realtor.com economists predicted the average rate on a 30-year home loan would fall to 6.5% by the end of 2024.
Meanwhile house prices will decline slightly by 1.7%.