The monthly mortgage payment for a median priced house in the United States has risen 42.5% in the past 12 months from $1,674 to $2,385 because mortgage rates have risen from 2.86% to 6.02%.
Rates for a 30-year mortgage in the U.S. are now above 6% for the first time since November 2008.
Two years ago the rate on a 30-yr mortgage rate was 2.87% while the average new home price was $405k. Now, in September of 2022, the 30-yr mortgage rate is 6.02% while average new home price is $547k. So, if you put 20% down that would represent a $28k increase in your down payment in addition to a 96% increase in your monthly payment. These increased monthly payments would not include other expenses such as property taxes, insurance, utilities, and repairs/maintenance most of which have seen major increases as well, with the likelihood of big increases for property taxes and insurance going forward.
These huge increases in home ownership expenses will not only continue to slow the housing markets, but will also put he squeeze on homeowners and real estate speculators with adjustable rate mortgages.
On the flip side… The 1-Year US Treasury yield has moved up to approximately 3.98% (as of 9/16/22) which is its highest level since October 2007. Just 15 months ago it was at an all-time low of only 0.04%. But, good news for savers (higher interest rates) usually translates into bad news for stock market investors and holders of adjustable rate mortgages. And, we are now in what is historically the worst 2 months of the year for stocks… September and October.