The average rate of a 30-year fixed mortgage hit 6.22% on June 15. That was up from 3.29% at the start of the year and could still climb higher as the Federal Reserve commences an aggressive tightening policy, raising rates in an effort to cool the four-decade high inflation. The last time the 30-year fixed mortgage rate topped 6% was in November 2008 during the Great Recession.
While existing fixed-rate mortgage holders are not affected by the recent jump in rates, anyone seeking to take out a mortgage, including first-time homebuyers or those seeking to upgrade to a more expensive home, would find the cost of a mortgage much higher now than at the beginning of the year. How much higher?
To identify the impact rising interest rates can have on homebuyers in each state, 24/7 Wall St. reviewed the report Rising Mortgage Rates Could Cost Some Homebuyers More Than $100,000 Over Lifetime of Loans from LendingTree.
The report looked at how rising interest rates could affect the cost of a mortgage, calculating the difference between average monthly mortgage payments on 30-year, fixed-rate loans in each state based on average annual percentage rates in January and April 2022 in each state. The report also calculated the extra amount paid over the lifetime of the mortgage. Median household income and total population figures are from the Census Bureau’s American Community Survey 2020 and are five-year estimates.
At the beginning of the year, the national average 30-year fixed mortgage rate was 3.29% on Jan. 3. By the end of April, it hit 4.88%. To put that into perspective, a homebuyer in Ohio who took a 30-year fixed rate mortgage was charged an average APR in January of 3.94%, amounting to a monthly payment of $1,145. By April, the average APR in Ohio had risen to 5.33%, adding $200 to the monthly payment, or $71,837 over 30 years.
And Ohio is the state where the monthly cost difference is the lowest. For homebuyers across the 50 states, the added monthly cost in mortgage payment ranges from $200 to $407, or an additional cost of nearly $72,000 to $146,000 over the lifetime of the mortgage.
While nine of the 10 states with the highest difference in monthly mortgage costs are in the West and the Northeast, the states with the lowest added monthly cost are in the South and Midwest. (These are cities with skyrocketing home prices this summer.)
Higher mortgage rates cool demand for homes from buyers as well as deter owners from putting their homes on the market if they have to trade their lower fixed rate for a higher one on another mortgage. This could begin to affect the hot U.S. housing market. (This is the state with the most foreclosures.)
Here are the rising mortgage rates cost homebuyers at least $100K in every state
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