Increasing Mortgage Rates and Their Effect on Housing Market

by Tom Ciccarone

Check out the article below to learn house the recent rise in mortgage rates are starting to affect the market.

I mention this often to prospective buyers, sellers, friends & family - a 1% rise in mortgage rate equates to roughly 9% less buying power. Rates as January 1, 2022 hovered around 2.9% to 3%. Rates as of today are around 5.5% to 6%. Look at the example below to see the change in monthly principal & interest payments at those different rates.

Example: $500,000 purchase price with $100,000 down and monthly principal and interest payments:

At 3% the P&I is $1,686
At 5.5% the P&I is $2,271
That is a $585 per month increase, which is $7,020 additional in payments each year.
At 3% with $100,000 down payment and P&I payments of roughly $2,770, that same buyer could afford a $640,000 home, roughly 28% more than they can at $500,000.

*These numbers are examples and for illustrative purposes only.

Need help finding your home? Call me any time.

Tom Ciccarone