For the first time in over a decade, the average 30-year fixed-rate mortgage climbed to 5% at the start of April after falling to an all-time low during the pandemic. As rates continue to climb higher, homebuyers are being priced out of a red-hot market in mass numbers, and more significant gains are likely if the Fed continues to raise its financial benchmarks to put a cap on runaway inflation, Realtor.com reports.
The consumer price index is up 8.5% year-over-year, meaning that everyday costs for energy, food and airfare are becoming increasingly unaffordable for many households already contending with elevated housing costs.
A year ago, buying the median American home at prevailing rates meant a monthly mortgage bill of about $1,223 after a 20% down payment, according to calculations by George Ratiu, an economist at Realtor.com. At recent rates, such a purchase would require a monthly payment of nearly $1,700—a 38% increase, he estimated.
Interest rates are rising elsewhere in the economy too, lifted by the Fed’s plans to raise benchmark overnight-lending costs and draw down its support for bond markets. In doing so, the Fed aims to bring demand into balance with supply, chilling upward pressure on prices.
Advertisement
Related Stories
Off-Site Construction
New Study Examines Barriers and Solutions in Manufactured Housing
The study from Harvard's Joint Center looks at the challenges faced by developers using manufactured housing and how they're overcoming those barriers
Affordability
The Disappearing Act That Is Middle-Income Housing
An expert weighs in on the diminishing supply of middle-income housing, which is particularly acute in California, and what to do about it
Off-Site Construction
Utah Passes Bill to Regulate Modular Construction at the State Level
Goals for housing innovation and affordability meet in Utah's passage of a new bill that establishes a statewide modular construction program