Higher Rates Lower Affordability

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While higher rates have so far had a fairly benign impact on financial markets, they have led to an increase in mortgage rates.
Higher mortgage rates can decrease housing affordability, and thus have the potential to lower the demand for home purchases.
According to Bankrate.com, the average national rate for a 30-year fixed mortgage was just over 4.15% in mid-December, around 85 basis points higher than the 3.3% lows of September.
This means that a home buyer purchasing a new home with 20% down at October’s median home price of $304,500 would now have to pay $1,187 per month at a 4.17% rate, versus $1,070 at a 3.32% rate — an increase of $117 per month.

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