At 7.28%, the American dream just got a $215-a-month surcharge
On a $429,100 median home with 20% down, principal and interest rises from about $2,130 to $2,350
Rising mortgage rates are hitting potential homebuyers right in the wallet. With the average 30-year fixed mortgage rate now at 7.28%, the monthly principal and interest payment on a median-priced home of $429,100 with a 20% down payment has increased by $215. This takes the monthly P&I payment from $2,130 to $2,350. For renters looking to buy, this added expense may make the prospect of homeownership even more daunting.
This rate hike is particularly significant for those on the cusp of deciding whether to rent or buy. As rates continue to climb, the gap between renting and buying costs may narrow, making leasing a more attractive option for some. In many markets, the cost of renting is still lower than buying, but that calculus is changing. As the American dream of homeownership becomes more expensive, some would-be buyers may be priced out of the market altogether.
What's next to watch is how these rising mortgage rates impact housing inventory and prices. If buyers are indeed priced out, we may see an increase in available rentals and a slowdown in home price appreciation. Conversely, if buyers remain eager to purchase, we could see sellers holding firm on prices, even as rates continue to rise. Either way, the shifting landscape is likely to have significant implications for the lease market, and we'll be keeping a close eye on developments.
Originally reported by housingwire.com. LeaseNews adds analysis for real estate & property readers.