Mortgage rates surpassed 6% this week. According to Freddie Mac, the 30-year fixed mortgage rate rose to 6.02% from 5.89% the previous week. Unyielding inflation continues to push up mortgage rates, reaching their highest level since 2008. As a result, the monthly mortgage payment has increased about 60% compared to a year ago.
There is no doubt that these higher rates hurt housing affordability. Nevertheless, apart from borrowing costs, rents additionally rose at their highest pace in nearly four decades. Although first-time buyers need to spend about $100 more for their monthly mortgage payment than their rent, first-time home buyers should consider that their monthly mortgage payment is not adjusted to inflation. This means the monthly mortgage payment remains the same during the loan period. However, if rents rise about 5% for the next couple of years, these buyers will have to pay about $100 extra for their rent than their current monthly mortgage payment.