Rapidly rising mortgage rates mean homebuyers will have to pay significantly more for a home loan than just eight months ago.
In November, a 30-year fixed-rate mortgage, the most popular home loan product, was just 3%. As the rate approaches 6%, the added cost of a 30-year mortgage is hundreds of thousands of dollars.
A jump in rates of 3-6% causes the lifetime cost of a standard 30-year fixed rate mortgage to increase by more than half the sale price of the home.
For a $250,000 house, the mortgage would cost an additional $128,000 over 30 years. That translates to an extra $356 monthly mortgage bill. For a house bought at $750,000, owners would pay $1,067 more.
This week, mortgage rates saw their biggest one-week rise in decades. The 30-year fixed-rate mortgage now stands at 5.78%, a level not seen since 2008, according to data released by Freddie Mac.
Higher rates can be a major factor in the decision to buy a home and signs of a declining housing market were already apparent this year. While Realtor.com initially predicted a 6.6% increase in home sales this year, the real estate listings website recently downgraded its projection to a 6.7% decline in 2022 from the previous year. ‘last year.