House hunters are facing a shocking number these days.
Pity today’s homebuyers who are looking at an average monthly mortgage payment just shy of $2,900.
The reason? The average rate for the benchmark 30-year fixed mortgage recently crossed 8% for the first time since 2000 – which, combined with stubbornly high housing prices driven by a limited supply, has pushed the average mortgage payment up by 125% since the end of 2020—when the 30-year fixed hovered around 3%.
That means the average monthly mortgage payment on a $309,200 home (the median price at the end of 2020) stood at $1,282 back then. But today, with a median home price of $394,300, buyers can expect to shell out $2,896 a month.
Bottom line: The average homebuyer in the current market can tack on more than $19,300 in additional annual mortgage costs compared to roughly three years ago.
On the plus side, most current homeowners are unlikely to feel that pain. According to data from Redfin (as of 6/14/23):
- 82.4% of existing homeowners with a mortgage have a rate below 5%.
- 62% have a rate below 4%.
- 23.5% have an interest rate below 3%.
That’s good news for overall consumer spending, which has been crucial in keeping the economy resilient despite higher interest rates. But for many, the prospect of a new home is accompanied by the need for a much fatter wallet.
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