Home buyers should expect to pay about $168 extra per month for their mortgage this year due to higher home prices and interest rates over the past 12 months, according to a new analysis by realtor.com®. The figure is based on the purchase of a $274,900 home, the median list price.
The average monthly mortgage is now $1,486, up from $1,318 in February 2017, according to realtor.com®.
But location can have a big impact. For example, Seattle buyers have seen their payments jump by $449 a month. Home prices in Seattle have risen more than 19 percent over the past year, according to the study.
In realtor.com®’s analysis of 20 housing markets, five markets besides Seattle have seen the biggest increases in mortgage payments: San Francisco ($378); Los Angeles ($363); San Diego ($242); Minneapolis ($236); and Atlanta ($213).
Home prices have risen in many markets, and interest rates on a 30-year fixed-rate mortgage have increased 28 basis points over the past year. But the bulk of the payment increases are due to higher home prices more so than the higher mortgage rates, says Danielle Hale, realtor.com®’s chief economist.
“For many buyers, it will be a choice of selecting a lower-priced home, and perhaps giving up some desired home features to get into that lower price range, or digging deeper into their wallets, if they want to close,” Hale says.
Matthew Gardner, chief economist of Windermere Real Estate, says the rise in mortgage rates may cause some home buyers to be in more of a rush this spring and summer, before any further increases.
“People who are thinking about buying, if they’re seeing rates rising, they are going to try to get into the market sooner rather than later,” Gardner told realtor.com®. “It’s going to be remarkably competitive. There’s going to be more buyers than there will be sellers.”
Source: “With Home Prices and Interest Rates Rising, How Much Could Mortgage Bills Grow?” realtor.com® (March 13, 2018)
