How much rising mortgage rates could cost Minnesota homebuyers
June 30, 2022
Mortgage interest rates are rising rapidly in the United States. As the Federal Reserve pursues an aggressive strategy of rate hikes to rein in inflation, homebuyers are increasingly grappling with higher borrowing costs.
The national average 30-year fixed mortgage rate is now nearing 6%, down from just 3.79% in January. The rate hike could mean tens of thousands of dollars more in interest payments for first-time homebuyers this year.
A recent report by lending platform LendingTree looked at home sales and mortgage lending data to quantify the effect rising mortgage rates could have on homebuyers.
In Minnesota, the average APR – annual percentage rate of charge – on a mortgage rose from 3.77% in January to 5.22% in April. This increase means that a homebuyer who took out a mortgage in April will pay about $244 more per month in interest than a buyer who took out a mortgage in January, based on the average mortgage amount of $283 $885 in Minnesota.
Taking into account both average home values and mortgage rates, the January-April interest rate hike for the typical Minnesota buyer will add up to $2,931 more in the first year alone and $87 $938 over the life of the 30-year mortgage – the 21st lowest increase among states.