Market Data + Trends

Mortgage Rates Are up to 5% For the First Time in Over a Decade

It seems that the days of ultra-low mortgage rates are behind us, at least for the time being, experts say
April 15, 2022

For the first time in over a decade, the average 30-year fixed-rate mortgage climbed to 5% at the start of April after falling to an all-time low during the pandemic. As rates continue to climb higher, homebuyers are being priced out of a red-hot market in mass numbers, and more significant gains are likely if the Fed continues to raise its financial benchmarks to put a cap on runaway inflation, Realtor.com reports.

The consumer price index is up 8.5% year-over-year, meaning that everyday costs for energy, food and airfare are becoming increasingly unaffordable for many households already contending with elevated housing costs.

A year ago, buying the median American home at prevailing rates meant a monthly mortgage bill of about $1,223 after a 20% down payment, according to calculations by George Ratiu, an economist at Realtor.com. At recent rates, such a purchase would require a monthly payment of nearly $1,700—a 38% increase, he estimated.

Interest rates are rising elsewhere in the economy too, lifted by the Fed’s plans to raise benchmark overnight-lending costs and draw down its support for bond markets. In doing so, the Fed aims to bring demand into balance with supply, chilling upward pressure on prices.

Read more

Sign-up for Pro Builder Newsletters
Get all of the latest news and updates.