With record-low interest rates now being past tense, mortgage rates approaching 6% are becoming standard.

Difference Between Monthly Mortgage Payments in January and April 2022

LendingTree recently released a study that calculated the difference between average monthly mortgage payments on 30-year fixed-rate loans in each state on average annual percentage rate (APR) in January and April 2022.

This study pointed out that rising APRs could potentially cost new borrowers throughout the US more than $100,000 over the lifetime of the loan.

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Key Findings of LendingTree Study

  1. 30-year, fixed-rate mortgage APRs have increased an average of 1.46% points in all 50 states since January. In January, the average APR was 3.79%; in April, it was 5.25%.
  2. Nationwide, rising APRs are causing new mortgage payments to increase an average of $258.57/month. Such a monthly increase translates into an average of $3,202.82/year in extra costs and an average of $93,084.60 in extra costs over the lifetime of a 30-year mortgage loan.
  3. Mortgage payments increased the least in Ohio, West Virginia and Kentucky. Such relatively low loan amounts increased monthly payments by $199.55, $200.81 and $202.28, respectively.  Though these increased costs are less than the national average, these increased costs due to rising APRs add up to an average of $72,316.72 in extra costs over the 30-year lifetime of a mortgage loan.
  4. Mortgage payments increased the most in California, Washington and Massachusetts. These three states saw respective monthly increases of $406.78, $357.38, and $337.23.  Over the 30-year loan cycle, these extra monthly costs add up to an average of $132,167.83.

The Future of Interest Rates

Since April, interest rates on 30-year, fixed-rate mortgages reached 5% for the first time in more than a decade, +3% y/y, and have held steady, according to Freddie Mac.  However, now interest rates are fluctuating at around 5.43-5.49%.

Jacob Channel, the senior economist at LendingTree, said, “I think it’s noteworthy, because when you say mortgage rates have increased 2%, it doesn’t sound very big.  But when you take a step back, it really does add up to a lot of money.”

As the Consumer Price Index hit its highest level most recently, the Federal Reserve is expected to, and it’s more than highly likely, raise its benchmark rate .75 percentage points more than once this year.  This, of course, will only push housing costs for new buyers even higher than they are right now.

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Thanks to LendingTree and The New York Times.

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