As record low mortgage rates gradually return to pre-pandemic levels, buyers are feeling the sting of soaring home prices, which rose 32.6% nationwide over the past two years. At current mortgage rate levels, the typical U.S. household would have to allocate 29% of their monthly income to afford a mortgage payment on an average priced home, Fortune reports.
A growing affordability crisis leaves prospective buyers in possibly the worst housing market since 2007, but experts are eyeing a potential slowdown caused by economic shock from even higher mortgage rates over the coming months.
Back in December the average 30-year fixed mortgage rate sat at 3.11%. A borrower who took out a $500,000 mortgage at that 3.11% rate would've seen a monthly principal and interest payment of $2,137. Now that the average rate is up to 4.72%, a new loan at that size would equal a $2,599 monthly payment. Over the course of 30 years, that's an additional $166,106.
This swift jump in mortgage rates puts homebuyers in the worst position since 2007. At least that's according to one metric produced by Black Knight, a mortgage technology and data provider.
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