almost 2 years ago • 1 min
US mortgage rates have shot up lately, with the 30-year fixed rate home loan – by far the country’s most popular mortgage – rising more than 50% above December levels. That’s its biggest three-month gain since 1987, and puts the 30-year mortgage rate at nearly 5% – up from around 3% last year, on the back of surging inflation and expectations of multiple Federal Reserve interest rate hikes this year.
So let’s say you made a down payment last year of 10% on a $500,000 loan: your monthly payment (which we’ve calculated using Bankrate’s mortgage calculator) would’ve come to $2,290. If you make one today, you’ll be paying $2,810 a month – $520 more – for the next 30 years. Add that to a 20% rise in food prices and a 90% rise in gas prices over the last year, and you might suddenly find you have a lot less cash in your pocket.
Now, it’s true that wages have been rising as companies try to one-up their competition in a competitive jobs market. But it might not be enough to offset mortgage rates, especially given how quickly they could continue to rise. And that’s not just a problem for you: consider too that consumer spending is a massive driver of US economic growth. So if it starts to slip, it might not be long before the economy does too…
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