The 6.20% is at least the highest since 2019 and likely much farther back. (Our data only goes back to 2020, but mortgage rates as measured by Freddie Mac, which has data back to 1971, were near their highest since 2009 last week.) Higher borrowing costs have dramatically changed the math on buying a house, and are starting to impose a real drag on what has been a hot housing market during the pandemic. For example, if you’d bought a median-priced home at today’s interest rate, your monthly mortgage payments would be about $1,917 a month. If you’d pulled the trigger in December 2020 when rates were just 2.89% by The Balance’s data, the payment would have been a much-more-affordable $1,301 with the same-priced home. (Both of those figures assume a 20% down payment, and are just for mortgage payments and interest, not counting things like insurance and taxes.) That means you’d pay $377,082 in interest over the life of the loan at today’s rates, versus $155,385 with the rock-bottom pandemic-era rates. Indeed, that stark contrast makes it easy to understand why the Fed raises borrowing costs to tamp down inflation. Loans and the things you buy with them become far less attractive when you have to pay more than twice as much. Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
