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Friday, May 20, 2022

Lawler: The Sharp increase in Monthly Payments in Selected Metro Areas

by Calculated Risk on 5/20/2022 10:31:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: Lawler: The Sharp increase in Monthly Payments in Selected Metro Areas


According to Mortgage News Daily, the interest rate on a 30-year fixed-rate mortgage for a prime borrower putting 20% down increased to 5.45% earlier this week from 3.14% a year ago.  Such an increase would result in a 31.6% jump in the monthly principal and interest (P&I) payment on a mortgage with a fixed dollar amount.  However, the increase in the monthly P&I payment for a typical home bought today compared to a year ago would be massively higher than 31.6%, as home prices nationally are up by over 20% from a year earlier, and by much more in many markets.  In addition, that means a 20% down payment has risen sharply as well.

Below is a table showing the year-over-year increase in a 20% down payment and the P&I payment for a 30-year FRM for the US and for several metro areas on a “typical” single-family home. ...

Housing Units Under ConstructionClick on table for larger image.
It is not the absolute mortgage rate, rather the change in monthly payments that is causing the slowdown in the housing market.
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