(Bloomberg) — The average monthly payment for new mortgages increased 46% in 2022 as interest rate hikes squeezed US home borrowers, according to the Consumer Financial Protection Bureau.
(Bloomberg) — The average monthly payment for new mortgages increased 46% in 2022 as interest rate hikes squeezed US home borrowers, according to the Consumer Financial Protection Bureau.
Payments on conventional 30-year fixed-rate mortgages increased to $2,045 in December 2022 from $1,400 a year earlier, the CFPB said Wednesday in a report. The consumer watchdog annually collects and analyzes data under the Home Mortgage Disclosure Act, also known as HMDA.
The trends are expected to persist this year, “given further increases in interest rates in 2023,” CFPB Director Rohit Chopra said in an accompanying statement. Home purchases and mortgage origination volumes have dropped precipitously in pace with the Federal Reserve’s moves.
“The higher interest rate environment had profound effects on the mortgage market in 2022, with borrowers paying much more in monthly payments,” Chopra said in the statement.
Last week, US mortgage rates jumped to the highest level since 2000, with the contract on a 30-year fixed mortgage rising 10 basis points to 7.41%. Mortgage rates are unlikely to improve in the near future. Fed Chair Jerome Powell stressed last week that the central bank will keep borrowing costs elevated — and could increase them further — if inflation fails to recede back toward its 2% target.
Read More: US Mortgage Rate Climbs to 22-Year High of 7.41%, Curbing Demand
In addition to rising monthly payments, the costs and fees associated with home loans also increased by roughly 22% over the 12-month period, reaching a median of $5,954.
The CFPB also found evidence of higher mortgage denial rates for Black and Hispanic White borrowers, compared with non-Hispanic Whites and Asians, a trend that’s consistent with previous analyses of mortgage lending data.
“The denial rate of home purchase loan applications for conventional conforming loans was 16.2% for Black applicants and 10.9% for Hispanic White applicants,” the report found. “In contrast, the denial rate of home purchase loan applications for conventional conforming loans was 5.6% for non-Hispanic White applicants.”
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