With rates at a 22-year high, the $3,000 monthly mortgage payment becomes the norm

Mortgage rates, ratesIn the face of spiking interest rates and historically high home prices, $3,000 monthly mortgage payments are common in today’s housing market.According to Black Knight’s mortgage monitor report, the average principal and interest payment among borrowers purchasing a home using a 30-year fixed-rate loan hit its highest point ever in July at $2,306. That’s before taxes and insurance are factored in (an average of $550 a month). It’s up 60% over the past two years.“Just two years ago, only 18% of homebuyers were facing that level of payment; as of the end of July that share had grown to 51%,” remarked Black Knight Vice President of enterprise research Andy Walden.“Beyond that, nearly one in four July homebuyers has payments north of $3,000, up from just 5% in 2021. We’ve been talking about affordability for quite some time now, but this puts the situation in stark relief,” he added.Beyond purchase affordability, rising interest rates prevent mortgage holders to tab into their home equity In the second quarter of 2023, mortgage holders tapped $39B in equity through cash-out refis as well as home equity loans and lines of credit. It was up modestly from the first quarter of 2023 but just half the volume of the first quarter in 2022 ($79B), before rates began to rise.Between 2010 and 2021, mortgage holders withdrew an average 0.92% of available tappable equity each quarter. That share fell to just 0.4% over the past three quarters, researchers found. Overall, it resulted in a roughly 55% decline in equity withdrawalsIn other words, since rates began to climb in early 2022, nearly $200 billion in equity that might have otherwise been withdrawn and injected into the broader economy has remained untapped, according to Black Knight.Tappable equity levels remain elevated, Walden noted.HELOC rates have risen along with Fed rate hikes, with the average HELOC offering now above 8.5% for the first time in the 15+ years Black Knight has been tracking that data.

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