US Mortgage Rates are continuing to rise in 2022 to record highs. The entire country faces rising inflation and a potential recession. The recent interest rate spikes are impacting potential home-buyers, causing mortgages to increase and the number of homes being bought to decrease.
“Seeing interest rates rise is only going to hurt affordability more for first-time homebuyers,” said Jessica Lautz, the vice president of demographics and behavioral insights at the National Association of Realtors. “And these rising costs will disproportionately exclude people of color and single parents from owning.”
Looking at a $400,000 home with a 10% down payment, the price is drastically different than it was last year. In 2021, at a 2.88% interest rate, monthly payments would be $1,495 per month. On the other hand, in 2022 at a 6.7% interest rate, homebuyers would be paying $2,323 per month, according to the St. Louis Fed, due to the current US mortgage rates.
As a result of the rising, a $400,000 home would cost $836,280 over 30 years if bought in 2022. It’s growing increasingly difficult to buy a home in many areas throughout the country. Even rentals for apartments have seen increases since the pandemic. With inflation growing, the rates will only continue to rise as the Federal Reserve hikes up interest rates more.
The Fed will meet in November to decide if it will raise rates once again. If done, this may spark a global recession at the beginning of 2023, according to experts and analysts.