Rising mortgage rates reduce household purchasing power just like higher taxes and inflation.
by Charles H. Smith, Of Two Minds:
Mortgage rates have jumped significantly in the past few weeks, from 3.50% at the beginning of May to the current rate of 4.875% for conventional Fannie Mae mortgages.
These are the two rates quoted by a mortgage broker in Mish’s recent post on rising mortgage rates.
Here is the repayment summary for both rates courtesy of mortgagecalculator.org:
I plugged in these parameters, basing them on the average cost of a new home and a mid-range property tax rate:
$360,000 home value, $300,000 mortgage, annual property tax rate of 1%, interest rate of 3.50%:
Monthly Payment: $1,647.13
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