Beyond Principal and Interest: The Escrow Effect

Over the past year, many homeowners have looked at their monthly housing expenses and thought, “Why is this higher?” Their mortgage rate hasn’t changed. They didn’t refinance. They didn’t take on a new loan. And yet, they’re paying more each month.

What’s happening is that while the principal and interest portion of the mortgage remains the same, property taxes and homeowners’ insurance - collected through escrow - have been changing, and in some markets, rising meaningfully.

Using national, metropolitan, and county-level data from 2019 through 2024, this analysis examines how escrow costs and their share of total monthly owner costs have changed over this five-year period.

National Context: Escrow Costs Rose, but Their Share Remained Stable

At the national level, median monthly homeowner costs increased from $1,630 in 2019 to $2,074 in 2024, a 27% increase.

Over the same period, escrow costs rose as well, but not as fast. Combined monthly escrow costs - property taxes and homeowners' insurance - increased from $334 to $419, a 25% increase. Breaking this down, homeowners’ insurance increased from $91 to $128 per month, a roughly 41% increase. Property taxes increased from about $243 to $291 per month, a nearly 20% increase.

But here is the unexpected part, and one that isn’t aligned with what homeowners actually feel. Despite these increases, escrow’s share of total monthly owner costs declined slightly, from 20.5% in 2019 to 20.2% in 2024. How can that happen? Because other components of monthly owner costs - particularly principal and interest for recent buyers - rose at a faster pace. Elevated mortgage rates, combined with home price appreciation, led to higher borrowing costs for buyers in 2024, offsetting the impact of escrow increases. Thus, even though escrow costs increased meaningfully in dollar terms, they did not become a larger share of the typical homeowner’s monthly payment.

Metro Examples: Where Escrow Changed the Most - and Where It Stayed Relatively the Same

Metros with the Largest Increases in Escrow Share

Port St. Lucie, FL, experienced one of the largest increases in escrow share over the five-year period (2019-2024). Specifically:

• Monthly escrow: increased from $322 in 2019 to about $600 in 2024
• Escrow share of monthly owner cost: rose from approximately 21% to 27%
• Primary driver: homeowners’ insurance, which more than doubled over the period

In this market, escrow not only increased in dollar terms but also became a larger share of the monthly payment, making these changes more noticeable to homeowners.

New Orleans–Metairie, LA, is another example that shows a similar trend but with a smaller effect.

• Monthly escrow: increased by nearly $210 between 2019 and 2024
• Escrow share: increased by 5.4 percentage points
• Primary driver: rising homeowners’ insurance premiums

Metros Where Escrow Costs Rose, but the Share Remained Stable

In other metros, escrow expenses increased substantially, but escrow’s share of total monthly owner costs changed little because total housing costs rose even faster at the same time in these markets.

Minneapolis–St. Paul, MN, is one of these markets.

• Monthly escrow: increased by approximately $120 over five years
• Escrow share: remained near 22%-23%
• Explanation: increases in property taxes and insurance were largely offset by rising total monthly owner costs

Bozeman, MT, illustrates another example of this group of markets.

• Annual property taxes: increased from roughly $2,600 in 2019 to about $4,500 in 2024, an increase of more than 70%
• Monthly escrow: rose by more than 70%
• Escrow share: remained relatively stable near 18%–19%, as total monthly owner costs increased sharply

In these markets, escrow increases haven’t taken a larger portion of the monthly costs, even though homeowners are paying significantly more each month. Both home prices and borrowing costs increased even faster, keeping the escrow proportions relatively steady.

For example, in St. Lucie County, Florida, annual homeowners’ insurance increased from about $1,560 in 2019 to more than $3,500 by 2024. Monthly escrow payments increased by more than $250 over five years, and escrow accounted for a significantly larger share of the total monthly housing cost.

Jefferson Parish, Louisiana, shows a similar trend. Monthly escrow payments increased by approximately $230 from 2019 to 2024, largely due to rising insurance costs.

In contrast, counties such as Franklin County, Ohio, and Dane County, Wisconsin experienced steady increases in escrow expenses without a significant shift in escrow’s share of the monthly payment. In Franklin County, monthly escrows increased by just about $70 over five years, while the share of escrow fell to 24% from 26% total monthly owner costs rose at the same time. Dane County followed a similar trend, with annual property taxes increasing by nearly $820 over the period and escrow remaining a steady portion of the monthly payment.