The percentage of Americans paying $2,000 a month for a home mortgage has skyrocketed in two years.
In 2021, the figure stood at 18%. This July it hit 51%, Black Knight data showed.
Almost one in four homebuyers in July had payments above $3,000.
The housing market remains unaffordable for many Americans, and high mortgage rates in particular present an expensive headwind.
Data released by mortgage data and analytics firms Black Knight on Wednesday shows just how pricey it’s getting for many US home buyers.
Roughly 51% of homebuyers face monthly mortgage payments of $2,000 or more, up from 18% just two years ago. Not only that, but nearly a quarter of homebuyers have payments above $3,000 — up from 5% in 2021.
“Just when did the $2,000 monthly mortgage payment become the norm?” Black Knight Vice President of Enterprise Research Andy Walden said. “We’ve been talking about affordability for quite some time now, but this [data] puts the situation in stark relief.”
The Federal Reserve’s 11 interest rate hikes since March of 2022 have helped push mortgage rates to two-decade highs, though home prices haven’t fallen off as they typically do when rates climb. As a result, current homeowners are reluctant to move for fear of giving up the lower rates they secured before.
In July 2023, the average monthly principal and interest payment for borrowers with a 30-year fixed loan was $2,306, before additional taxes and insurance costs, according to Black Knight.
That’s the highest monthly P&I payment on record, and it’s climbed 60% over the last two years.
Meanwhile, the Case-Shiller US National Composite Home Price Index showed home prices climbed for the fifth consecutive month in June. The measure currently sits just 0.02% below the all-time high hit last summer.
“Rates aren’t just hampering prospective homebuyers, though,” Walden said. “While tappable equity levels have returned to near-record highs, rising rates are having a clear impact on how — and how much — equity mortgage holders are willing to withdraw from their homes.”
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