The sharp rise in mortgage rates this year has added hundreds of dollars to new monthly mortgage payments.
In fact, climbing rates have caused the monthly amount of a new mortgage payment to increase by an average of $258.57. That equals an average of an extra $3,102.84 per year and an average of $93,085.20 over the lifetime of a 30-year loan, according to a new LendingTree study that puts a dollar amount on how much rates have affected mortgage costs.
LendingTree calculated the difference between average monthly mortgage payments of a 30-year fixed-rate loan in each state based on average annual percentage rates in January and April 2022. They found that mortgage payments have risen the most in California, Washington, and Massachusetts. Mortgage payments have increased the least in Ohio, West Virginia, and Kentucky, the study finds.
APRs on the 30-year fixed-rate mortgage have jumped by an average of 1.46 percentage points across all 50 states since January, when the average APR was 3.79%. In April, it was 5.25%, according to LendingTree.
“Though mortgage APRs have already significantly increased since the start of the year, they may rise even further by 2023,” says Jacob Channel, LendingTree’s senior economic analyst. “This is especially true given that the Federal Reserve is poised to raise the Fed funds rate multiple times this year—including what is likely to be a 50 basis point hike announced this week—which will likely put even more upward pressure on mortgage rates.”
While mortgage rates are still low by historical standards, home buyers also are facing higher prices for homes. In the first quarter, 70% of the largest metros in the U.S. posted double-digit price growth in median single-family existing-home sales prices, the National Association of REALTORS® reported Tuesday. Read more: U.S. Metros See Major Price Appreciation