since the start of the year.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.49% from 5.53%
....Mortgage rates have risen over 2 full percentage points since the start of the year, and home prices are up more than 20% from a year ago.
So at the beginning of the year, it was 5.49% minus 2 full percentage points = 3.49%. On a $300,000 home at 3.49%, that's a $1,345/month principal and interest (P&I) payment for a 30 year fixed loan.
Now at 5.49% -- that's a $1,701/month payment.
That's a 26.5% increase. A $4,272/year increase. And it all goes to the bank (not the seller).
And it says home prices are up more than 20% from a year ago. Well, mid-May is 5.5/12 = 0.46 years from the beginning of this year (from where I figured the mortgage rates -- the start of the year)
So on average that $300,000 home became a $327,600 home (assumes a constant price increase over the past 12 months, 0.46 years * 20% = 9.2% price increase since the start of the year).
The P&I on a $327,600 home at 5.49% interest is $1,858/month
So in 5.5 months, thanks to the combination of higher mortgage rates and higher house prices, we have a 38.1% increase in the P&I payment. Which is a $513/month increase in the P&I payment ($6,156/year).
The boost in prices helps the home seller of course (leaving aside that the home seller has to find another place to live, also at an inflated price compared to 5 1/2 months ago, so its not all joy and gravy).
The boost in the mortgage rate helps neither buyer nor seller, just the bank.
= new reply since forum marked as read