Mortgage rates top 7% as housing affordability crisis deepens

WASHINGTON (Gray DC) - Mortgage rates climbed over 7% Thursday as the United States moves deeper into an affordability crisis, with the economy top of mind for millions of voters heading to the polls in November.

The average age of a first-time homebuyer is nearly 40, according to data from the National Association of Realtors. In 1991, that age was 28.

Part of the reason is home price. For example, in 1991, research found the average house in Washington, D.C., cost $121,000. Zillow now says that figure is $570,000.

Mortgage rates in the 1990s were 9%. This week, those rates hit 7%. House prices are five times higher than they were in 1991.

“Seven percent certainly isn’t what buyers want to see. But I don’t think 7% will stop the market,” said National Association of Realtors Principal Economist and Director of Real Estate Research Nadia Evangelou.

For those looking to buy their first home, Bankrate data shows what the numbers look like on a $600,000 house purchased today.

The first mortgage payment would be $3,992. Of that, $3,500 would go toward interest, and $492 would go toward principal. Over the lifetime of the loan, the buyer would pay nearly $1.5 million for a $600,000 house.

The rising rates are affecting first-time homebuyers. According to the Mortgage Bankers Association, mortgage applications are down 1.5% compared to last week. The refinance index is down 62% from this week last year.