The recent spike in interest rates, which have jumped from 3.5% to 4.25% in the past few weeks, have pushed the cost of an average home higher by around $16,400, according to CNBC.
Higher rates coupled with already high prices will make home affordability further out of reach for many Americans, especially since prices have already surpassed peak levels seen during the housing boom of 2006. At this rate, income levels would need to grow by 5% annually just to maintain current affordability levels, according to research by Black Knight Financial Services.
Another impact of higher rates is the reduced savings many existing homeowners can realize from refinancing to lower rates. According to Black Knight Financial Services, overall monthly savings have dropped from $2.1 billion prior to the presidential election to only $1 billion today.