Climbing Mortgage Charges Influence Patrons- Realtor.com

0
63

As mortgage rates continue to rise from record lows in January 2021, prospective home buyers will have to contend with higher mortgage payments. Exactly how dramatic this difference will be depends on the down payment, interest rate, and home price. In light of these rising rates, buyers facing a competitive market and rising home prices will be under more pressure at every budget.

To understand the impact of rising mortgage rates on homebuyers, we looked at the typical mortgage payment for the January 2022 national median home asking price of $375,000 at varying interest rates and two down payment amounts. The down payment amounts are round figures that approximate recent trends in down payments made by first-time and repeat homebuyers. For reference, in addition to looking at a variety of rates buyers may have seen in recent months, we also calculated a payment using the average mortgage rate from December 2020–when mortgage rates were at their lowest monthly average of 2.67%.

The monthly payment on a 30-yr mortgage for a $375,000 home with a 10% down payment would be $1,364 with the low December rate. The payment jumps to $1,525 if the only change is to adjust the mortgage rate to match the January 2022 average of 3.55%. This 88 basis point increase in interest rate would mean roughly an additional $58,000 in interest paid over the life of the 30-year loan (one basis point is 0.01 percentage points).

In the case of a 20% downpayment, we see the same pattern: the higher mortgage rate means higher monthly costs and higher total costs over the life of the loan. Specifically, the mortgage payment on a $375,000 home at a 2.67% mortgage rate would be $1,212 and at a 3.55% rate would be $1,356, a difference of $52,000 across the lifetime of the loan.

The chart below details the impact of rising mortgage rates on 30-yr mortgage payments with both a 10% and 20% down payment (excluding taxes and insurance).

10% down payment 20% down payment
mortgage rate Monthly Pmt Monthly Diff from Dec 2020 Yearly Diff from Dec 2020 30-yr diff Monthly Pmt Monthly Diff from Dec 2020 Yearly Diff from Dec 2020 30-yr diff
3.10% $1,441 $78 $936 $28,080 $1,281 $69 $828 $24,840
3.20% $1,460 $96 $1,152 $34,560 $1,297 $85 $1,020 $30,600
3.30% $1,478 $115 $1,380 $41,400 $1,314 $102 $1,224 $36,720
3.40% $1,497 $133 $1,596 $47,880 $1,330 $118 $1,416 $42,480
3.50% $1,516 $152 $1,824 $54,720 $1,347 $135 $1,620 $48,600
3.60% $1,534 $171 $2,052 $61,560 $1,364 $152 $1,824 $54,720
3.70% $1,553 $190 $2,280 $68,400 $1,381 $169 $2,028 $60,840
3.80% $1,573 $209 $2,508 $75,240 $1,398 $186 $2,232 $66,960
3.90% $1,592 $228 $2,736 $82,080 $1,415 $203 $2,436 $73,080
4.00% $1,611 $248 $2,976 $89,280 $1,432 $220 $2,640 $79,200
4.10% $1,631 $267 $3,204 $96,120 $1,450 $238 $2,856 $85,680
4.20% $1,650 $287 $3,444 $103,320 $1,467 $255 $3,060 $91,800
4.30% $1,670 $307 $3,684 $110,520 $1,485 $273 $3,276 $98,280
4.40% $1,690 $327 $3,924 $117,720 $1,502 $290 $3,480 $104,400
4.50% $1,700 $336 $4,032 $120,960 $1,511 $299 $3,588 $107,640

Assuming a $375,000 home, taking on a 30-yr mortgage, excluding taxes and insurance

The impact of increasing mortgage rates for the top 25 metros is explored below. For this analysis, we assumed a 10% down payment on a 30-yr mortgage. Checkout how various interest rates would impact other metro areas here: https://www.realtor.com/mortgage/tools/mortgage-calculator/

Metro Level Mortgage Impact:

Mortgage Payment at Given Interest Rate

(10% down payment)

MetroTitle Jan 2022 median listing price Dec 2020 Rate: 2.67% 3% 3.5% 4% 4.5%
New York-Newark et al, NY-NJ-PA $680,000 $2,473 $2,580 $2,748 $2,922 $3,101
Los Angeles-Long Beach et al, CA $825,000 $3,000 $3,130 $3,334 $3,545 $3,762
Chicago et al, IL-IN-WI $300,000 $1,090 $1,138 $1,212 $1,289 $1,368
Dallas-Fort Worth-Arlington, TX $387,000 $1,407 $1,468 $1,564 $1,663 $1,765
Houston-The Woodlands et al, TX $340,000 $1,236 $1,290 $1,374 $1,460 $1,550
Philadelphia et al, PA-NJ-DE-MD $300,000 $1,091 $1,138 $1,212 $1,289 $1,368
Washington et al, DC-VA-MD-WV $490,000 $1,782 $1,859 $1,980 $2,105 $2,234
Miami-Fort Lauderdale et al, FL $435,000 $1,582 $1,651 $1,758 $1,869 $1,984
Atlanta-Sandy Springs et al, GA $372,000 $1,353 $1,412 $1,503 $1,598 $1,696
Boston-Cambridge-Newton, MA-NH $660,000 $2,399 $2,504 $2,667 $2,835 $3,009
San Francisco-Oakland et al, CA $900,000 $3,273 $3,415 $3,637 $3,867 $4,104
Detroit-Warren-Dearborn, MI $215,000 $781 $815 $868 $923 $980
Phoenix-Mesa-Scottsdale, AZ $464,000 $1,687 $1,761 $1,875 $1,994 $2,116
Seattle-Tacoma-Bellevue, WA $695,000 $2,527 $2,637 $2,809 $2,986 $3,169
Minneapolis et al, MN-WI $375,000 $1,364 $1,423 $1,516 $1,611 $1,710
Riverside et al, CA $525,000 $1,909 $1,992 $2,122 $2,256 $2,394
Tampa-St. Petersburg et al, FL $373,000 $1,356 $1,415 $1,507 $1,603 $1,701
San Diego-Carlsbad, CA $780,000 $2,836 $2,960 $3,152 $3,351 $3,557
St. Louis, MO-IL $235,000 $854 $892 $950 $1,010 $1,072
Denver-Aurora-Lakewood, CO $570,000 $2,073 $2,163 $2,304 $2,449 $2,599
Baltimore-Columbia-Towson, MD $300,000 $1,091 $1,138 $1,212 $1,289 $1,368
Pittsburgh, Pa $205,000 $745 $777 $828 $880 $934
Portland-Vancouver et al, OR-WA $538,000 $1,958 $2,043 $2,176 $2,314 $2,455
Charlotte-Concord et al, NC-SC $382,000 $1,389 $1,449 $1,544 $1,641 $1,742
Orlando-Kissimmee-Sanford, FL $371,000 $1,349 $1,408 $1,499 $1,594 $1,692

Assuming a median listing price home, taking on a 30-yr mortgage, excluding taxes and insurance


Hannah Jones