Increase In Mortgage Rates Makes Homes $16,000 More Expensive

After the presidential election and a big sell-off in the bond market, the average interest rate on the 30-year fixed mortgage increased from 3.5 percent to as high as 4.25 percent in just over a month.

CNBC reports that according to Black Knight Data & Analytics, the rate increases make the average cost of a home higher by more than $16,400. It now takes more than a fifth (21.6 percent) of the median income to purchase a median price home, the highest share since June 2010.

The difference today, however, is that the supply of homes for sale is so low that fierce competition is keeping high pressure on prices. The supply problem may even be exacerbated by rising rates because homeowners who might have wanted to move will be dissuaded by the fact that they'll have to give up the record-low rates they locked in during the refinance boom of the last few years.

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