Homebuyers in 2022 are spending 1.5 times more on their mortgage bills than buyers in 2021 as the Fed continues to drive up interest rates to put a damper on runaway inflation. Housing supply is limited across the U.S. and home prices are still rising, but according to Realtor.com, skyrocketing mortgage interest rates are to blame for a growing affordability crisis.
Rising rates have inflated monthly mortgage payments by 50% in just one year, and popular metros like Miami are even seeing year-over-year mortgage payment increases of over 80%. While the majority of buyers determine a home’s affordability based on its price tag, behind-the-scenes fees like mortgage and principal costs are mounting along with prices for everyday goods and services, leaving many Americans with little wiggle room in their home budgets.
Most buyers have traditionally focused on the sticker price of a home (and how much extra they’ll have to offer to get it). But higher mortgage rates can significantly boost the amount homeowners will fork over to their lender. For example, nationally mortgage payments are about $1,882 a month, not including property taxes or homeowners insurance. A year ago, they were roughly $1,249.