Beyond deterring prospective buyers and causing a slowdown in home sales, elevated mortgage rates are also creating an affordability hurdle for existing homeowners as well. Insider reports that recent data from Black Knight shows approximately 51% of homebuyers now face monthly mortgage payments exceeding $2,000, which is a significant increase from 18% just two years ago.
Nearly a quarter of all buyers have payments surpassing $3,000, up from 5% in 2021. The Federal Reserve's series of interest rate hikes since March 2022 has driven mortgage rates to two-decade highs, amplifying affordability concerns. Despite rising rates, home prices have not seen a decline, discouraging existing homeowners from moving and thus exacerbating the current affordability crisis.
"Just when did the $2,000 monthly mortgage payment become the norm?" Black Knight Vice President of Enterprise Research Andy Walden said. "We've been talking about affordability for quite some time now, but this [data] puts the situation in stark relief."
"Rates aren't just hampering prospective homebuyers, though," Walden said. "While tappable equity levels have returned to near-record highs, rising rates are having a clear impact on how — and how much — equity mortgage holders are willing to withdraw from their homes."