Incremental increases in mortgage rates are adding hundreds of dollars in monthly costs for homebuyers, particularly high-end homebuyers.
The average monthly mortgage payment is up 13 percent as of last month compared to the year before, according to Realtor.com data cited by the Wall Street Journal. That translates into a $241-per-month increase on homes in the top 10 percent of the market and a $168-per-month increase across the board.
A quarter of a percent increase up to 4.6 percent on a $1 million, 30-year fixed rate jumbo loan would increase monthly payments by $151, according to the newspaper. The median sales price in the luxury market in many of the country’s top markets is near or well above that.
In New York, where the median price in the top 10 percent of the market is around $1 million, the quarter percent increase between February and March added $418 to a monthly payment, up to $6,530. In Los Angeles, a monthly payment on the median $1.4 million sale price shoots payments up by $460-per-month.
The Federal Reserve raised rates by a quarter of a percent to between 1.5 and 1.75 percent late last month in the first meeting chaired by new Chairman Jerome Powell. Four additional quarter-percent increases are expected this year and three next year.
Numbers gathered by Inside Mortgage Finance show the mortgage rate increases are hurting refinance originations — they were down by 35.6 percent by dollar volume in 2017 year-over-year — but new buyers appear to be moving to lock in rates or are simply unfazed by the increases, as purchase originations were up 10.6 percent during that same period.
Original content The Real Deal