May 9, 2022 - Real Estate

Surging mortgage rates make homebuying more expensive for Austin

Illustration of a house's roof being taken off by a trend line soaring upward through the home
Illustration: Annelise Capossela/Axios

Mortgage rates surpassed 5% — their highest in more than a decade, according to data shared by Freddie Mac.

Why it matters: Low mortgage rates made buying in a sellers' market more affordable in the pandemic.

  • This March, median home sale values in Austin were up 23% year over year, and now borrowing money is more expensive, too.
  • Already fatigued buyers could be priced out of the market.
Data: Freddie Mac, Redfin; Chart: Simran Parwani/Axios
Data: Freddie Mac, Redfin; Chart: Simran Parwani/Axios

State of play: A year ago, mortgage rates were at 2.97%. In late April, they sat at 5.11%.

If you took out a $300,000, 30-year mortgage loan in April 2021, your monthly principal and interest would be around $1,260, according to numbers shared by Freddie Mac.

  • Your monthly payment on a $300,000, 30-year loan this April (at 5.11%) would be $1,631.
  • That's $371 more per month; $4,452 a year; and $133,560 more over the life of your loan.

What's next: Mortgage rates are expected to rise throughout the year, averaging 4.6% for 2022 and 5% for 2023, according to Freddie Mac's trend forecast.

  • If demand cools because of rising rates, housing prices could stabilize.
  • We're still in a supply crunch, so inventory would have to catch up to the remaining demand for prices to actually cool.
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