{"id":873873,"date":"2026-10-07T11:42:11","date_gmt":"2026-10-07T11:42:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/873873\/"},"modified":"2026-10-07T11:42:11","modified_gmt":"2026-10-07T11:42:11","slug":"market-minute-home-ownership-and-7-mortgage-rates","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/873873\/","title":{"rendered":"Market Minute: Home ownership and 7% mortgage rates"},"content":{"rendered":"

The repricing of risk is affecting asset classes across the U.S. and global economies as investors reassess the wisdom of lending money to both public and private borrowers.<\/p>\n

That reassessment has resulted in rising risk premiums being attached to an array of lending products.<\/p>\n

That includes fixed 30-year mortgages, which in one way presents the most vivid affordability challenge for the Gen-Z cohort and younger millennials looking to buy a house.<\/p>\n

Get Joe Brusuelas\u2019s Market Minute commentary every morning.\u00a0Subscribe now<\/a>.<\/p>\n

And housing is likely to become more unaffordable. As the Federal Reserve seeks to restore price stability, it is embarking on a period of rate hikes that will in some respects require slower growth in residential investment and make it more difficult for younger and middle aged cohorts to purchase homes.<\/p>\n

Higher long-term rates will be a fact of life for the foreseeable future. Increased monthly mortgage payments will reduce household disposable income and restrain housing turnover as existing homeowners sit on their lower-rate mortgages.<\/p>\n

The national average mortgage rate has increased from 2.87% at the end of 2020 to 7.35% as of the first week of October. (Fannie Mae rates have been about 10 basis points lower this year.)<\/p>\n

With the increase in rates, monthly mortgage payments have moved higher as well. In 2020, for each $100,000 of a mortgage, households were paying $400 per month. That cost has increased to $690 per month.<\/p>\n

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The national median-sized home costs around $300,000, which in 2020 after a 10% down payment required a monthly mortgage payment of principal and interest of $1,119.<\/p>\n

At the current 7.35% mortgage rate, that figure is now $1,860 per month, an increase of $741 that cannot easily be spent elsewhere.<\/p>\n

Note that this is payment only for principal and interest on the loan and does not include insurance and local taxes.<\/p>\n

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While the cost of a mortgage has increased since 2020, a good portion of that jump has occurred since early this year.<\/p>\n

Since February, the cost of a monthly mortgage payment has increased $368 per month on a $500,000 home with a 10% down payment.<\/p>\n

That monthly increase comes to $4,416 per year because of a 126 basis-point increase in the prevailing 30-year fixed-rate mortgage.<\/p>\n

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The takeaway<\/p>\n

The housing market is in some respects collateral damage caused by pandemic-era shocks, the attempt to reshape global trade imbalances by Washington as well as the wars in Ukraine and the Mideast.<\/p>\n

In addition, because of rising long-term interest rates amid expansionary fiscal policies that have resulted in a deficit at or near 6% of gross domestic product, private investment is being crowded out by other priorities. The result is an affordability index for first-time buyers that has reached a multidecade low.<\/p>\n

As interest rates have increased, monthly mortgage payments have increased accordingly. That leaves little incentive for households to move, particularly if their current home was purchased during the era of near-zero interest rates after the 2008 financial crisis.<\/p>\n","protected":false},"excerpt":{"rendered":"The repricing of risk is affecting asset classes across the U.S. and global economies as investors reassess the…\n","protected":false},"author":2,"featured_media":873874,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[28,112],"class_list":["post-873873","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-business","tag-markets"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/873873","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=873873"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/873873\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/873874"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=873873"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=873873"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=873873"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}