Surging mortgage rates make home buying more expensive in Nashville

Rising mortgage rates are adding to the perfect storm putting pressure on the Nashville area's housing market.

• National mortgage rates surpassed 5% — the highest it's been 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.

• In March 2022, median home sale values in Nashville were up 23.9% year over year, and now borrowing money is more expensive, too.
• Already-fatigued buyers could be priced out of homes closer to the urban core.

What they're saying: "We've got a storm," Brian Copeland, founder of Doorbell Real Estate and immediate past president of Greater Nashville Realtors, tells Axios.

• Interest rates are combining with lightning-fast sales and Nashville's broad appeal to "create a supercell," he says.

Zoom out: Copeland says rising monthly mortgage payments continue to drive interest in surrounding counties where prices are more affordable.

• Dickson, Robertson and Sumner counties are becoming more attractive to prospective buyers, Copeland says.
• Copeland predicts interest will intensify just over the state line in Franklin, Kentucky.
• "If someone wants to be in this market with these higher interest rates, they're going to have to look at commute time."

State of play: A year ago, mortgage rates were at 2.97%. In late April 2022, mortgage rates were at 5.11%.

By the numbers: If you were to take 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 the same loan in April 2022 would be $1,631.
• That's $371 more per month, $4,452 a year and $133,560 more over the lifetime 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.

• So far in 2022, home prices haven't jumped drastically month to month, like they did in 2021.
• But we're still in a critical supply crunch, so inventory would have to catch up to the remaining demand for prices to actually cool.