Monthly Payment To Buy a House Shoots Up Since December

Number of the Day: The most relevant or interesting figure in personal finance

19.5%

That’s how much the monthly payment to buy a house has gone up in just three months, as buyers face soaring home prices as well as surging mortgage rates, according to a new report.

The average monthly payment to buy a typically priced home was $1,316 in March—up 19.5% from December, real estate firm Zillow said Wednesday. The estimate assumes a typically priced home of $337,560 as measured by the company’s home value index, a 20% down payment, and an average 30-year fixed rate mortgage of 4.17% as measured by Freddie Mac. Home prices in March grew at a record 20.6% compared to March 2021, Zillow said, at a time that mortgage rates have skyrocketed from the record lows they hit earlier in the pandemic (and since March they’ve risen even higher). With affordability eroding so fast, economists believe house price increases will soon slow.

"Higher mortgage rates were anticipated this year, but the speed of their rise has been breathtaking," said Jeff Tucker, Zillow senior economist, in a press release. "Record low mortgage rates had been an affordability lifeline during the pandemic, keeping monthly payments in check even while prices climbed quickly. March was the biggest test yet of whether enough buyers can meet the new asking prices to keep home values growing at a record pace.” 

Mortgage rates have generally surged because of the Federal Reserve’s war on inflation. The Fed has begun a campaign of counteracting today’s rampant inflation by raising its benchmark interest rate in an effort to slow the economy by discouraging borrowing and spending. That’s driven up yields on 10-year treasuries, which mortgage rates typically follow.

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