Median mortgage payment up 66% from a year ago at today's average interest rate
Rising rates and elevated home prices are pushing more would-be buyers out of the market
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The average rate for a 30-year fixed mortgage topped 6% this week for the first time since late 2008, and the latest data shows the staggering impact a combination of rising rates and elevated home prices has on home affordability.
After Freddie Mac reported Thursday that the average rate for the benchmark 30-year note is now at 6.02%, Realtor.com manager of economic research George Ratiu ran the numbers and found that the median mortgage payment is now $2,100 — a 66% surge from just a year ago.
Not only have interest rates more than doubled over the past year, but home prices also remain elevated due to low inventory. (Getty Images)
Using Realtor.com's latest list price for August of $435,000 and assuming a 20% down payment, Ratiu plugged in today's mortgage rate and discovered the eye-popping payment hike over this time last year when rates were still under 3%.
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The median $2,100 payment does not even include additional housing costs such as homeowners association fees and property taxes.
Ratiu called the increase "significant," telling FOX Business it shows "the incredible impact that interest rates — specifically mortgage rates — have had on a buyer's ability to finance a home right now."
Buyers are retreating from the market as they cancel home sales at the fastest pace since 2020, and mortgage applications for purchases continue to slide. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
Not only have interest rates more than doubled over the past year, but home prices also remain elevated due to low inventory. Ratiu said even with a significant slowdown in the market and some sellers slashing their asking price, home prices are still up roughly 14% from a year ago.
These factors are putting pressure on the housing market and causing more buyers to bow out.
A slew of new economic data published earlier this month shows the sector is starting to slow considerably: Home builders' sentiment about the industry plunged to the lowest level in two years, buyers are retreating from the market as they cancel home sales at the fastest pace since 2020, and mortgage applications for purchases continue to slide.
Realtor.com manager of economic research George Ratiu says rising interest rates "have absolutely put a ceiling on many Americans' ability to afford a home, and I think it's particularly challenging for first-time homebuyers." (Joe Raedle/Getty Images / Getty Images)
"In essence," Ratiu says, "the answer from the American homebuyer is pretty loud and clear, and that is: ‘We are tapped out.’"
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He added, "I think these rates have absolutely put a ceiling on many Americans' ability to afford a home, and I think it's particularly challenging for first-time homebuyers."
FOX Business' Megan Henney contributed to this report.