Fewer people are shopping for homes, a sign that homebuyers are getting priced out of the market due to surging mortgage rates, which spiked to an average of 5% this week for 30-year fixed-rate mortgages.
The fixed-rate mortgage rate jumped 0.28% in the last week alone, reaching a high not seen since February 2011, according to government-mortgage company Freddie Mac. A year ago, the 30-year rate averaged 3.04%, which is nearly 2% lower than the rate now.
That 2% difference can add hundreds of dollars to the monthly cost of financing a home, making it unaffordable for some potential buyers.
For a home worth $408,100 — the median home price in the U.S. — with a 20% down payment, 30-year fixed mortgage and a 5% interest rate, monthly mortgage costs would come to $1,752.62, according to CNBC calculations.
But for the same home purchased last year, when interest rates were 3.04%, monthly mortgage payments would only come to $1,383.51, according to CNBC calculations. That’s nearly $400 less per month, and more than $4,400 less per year.
