Buying a home to call your own has always been central to most Americans’ idea of the American dream. But is that dream dying?
A wicked brew of rising home prices and mortgage rates suggest it may be. Because of rising interest rates, a standard mortgage is now $900 per month more expensive than it was just a year ago.
The average house in the U.S. costs $428,700. If you get a 30-year mortgage rate on it today, and make the standard 20% down payment, your monthly mortgage payment would be about $2,675, depending on your lender and where you live.
That same house, at that same cost, would have cost you just $1,775 per month under mortgage rates just one year ago. Over the life of the loan, that house today will cost you about $324,000 more than it would have in October 2021.
Mortgate rates — averaging 7.2% today, compared to 2.9% 12 months ago — are a casualty of the Federal Reserve’s war on inflation. With the Fed’s benchmark interest rate expected to go as high as five percent this year, after several years at or near zero, homebuyers are paying the price.
Yet so far, inflation continues to soar.
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