Rate Increase Makes Homes 15% Less Affordable
Annual payments for a $200,000 30 year mortgage at 3.40% are about $10,700. If the rate is 4.56%, the annual payment increases by 15% to $12,400. Another way to look at it is that an annual payment of $10,700 pays for a $175,000 mortgage at 4.56% instead of a $200,000 mortgage at 3.40%. Unless you are paying all cash, home prices just increased about 15%.
And, here is a quick review of how rising rates impact corporate earnings: