While many first-time home buyers struggle to afford a down payment on a house in today’s market, one of the long-term affordability issues centers on monthly payments resulting from escalating mortgage rates. The current 30-year fixed-rate mortgage is 7.18%, according to Freddie Mac, a stark difference from the sub-3% rates seen during the early days of the pandemic.
The surging mortgage rate results in higher monthly payments for new buyers. Indeed, monthly payments are up 60% (or $871) year-over-year, according to real estate data and analytics firm Black Knight. The average monthly principal and interest payment for borrowers on a 30-year fixed rate loan in July 2023 was more than $2,300, which is the highest average principal and interest payment on record, according to Black Knight.
