New Mtg Math - $600K becomes $1M in Cost (Patreon)

The increase in mortgage rates from 3% to over 7% has made homeownership much more expensive. A $400,000 house that would have cost $1,518 per month at 3% interest now costs over $2500 per month at 7% interest. This means that the monthly payment on a $400,000 house has increased by over $1K per month.

Over the course of a 30-year mortgage, the additional interest payments on a $400,000 house at 7% interest would be over $627K. This means that the total cost of the house would be over $1M 

This increase in the cost of homeownership is making it difficult for many people to afford to buy a home. It is also leading to a decrease in home sales, as fewer people are able to qualify for a mortgage. 

But it is also difficult for the Government to afford these rates and I believe mortgage rates will mean revert over time - 2 years or so to the 3-4% level.