Close this search box.

Mortgage Payments Are Through the Roof


Red-hot inflation, and the Fed’s now-aggressive efforts to fight it, are pushing up mortgage rates at their fastest pace on record—and potentially putting the squeeze on homebuyers.

Consider this: The average monthly mortgage payment for the median-priced home has spiked by 56% during the past year (see the chart), as the average rate for the benchmark 30-year fixed mortgage has rocketed from 3.08% in late May 2021 to 5.91% today, according to Bank Rate.

In practical terms, that means the mortgage payment on a $350,500 home (the median price in May 2021) ran about $1,500 on average back then. Today, at a median home price of $391,200, buyers are looking at an average monthly payment of more than $2,300.

The outcome: New homeowners can tack on close to $10,000 in additional annual mortgage costs compared to this time last year. And with more Fed hikes on the way, most industry analysts expect still higher mortgage rates in the coming months.

This trend is pouring cold water on the housing market. Earlier this month, before the Fed’s most recent 75 basis point rate hike, softness in purchase and refinance applications dragged a key measure of mortgage loan application volume to its lowest level in 22 years. Additionally, construction on new homes dropped by 14.4% in May—the most significant decline since April 2021 and worse than Wall Street expected. Housing starts now sit at their lowest level since the early days of the pandemic.

Historically, housing market conditions have often been a harbinger of what’s to come as far as the economy’s overall health. At Horizon, we are carefully watching the Fed’s impact on home prices and demand going forward–as well as the ripple effect a big slowdown could have on consumer demand for home goods, the homebuilder sector, and other key economic metrics. How far the Fed takes interest rates from here will have implications for all assets in the coming months.

Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security. This report does not attempt to examine all the facts and circumstances that may be relevant to any company, industry or security mentioned herein. We are not soliciting any action based on this document. It is for the general information of clients of Horizon Investments, LLC (“Horizon”). This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security in question is suitable for their particular circumstances and, if necessary, seek professional advice. Investors may realize losses on any investments. Index information is intended to be indicative of broad market conditions. The performance of an unmanaged index is not indicative of the performance of any particular investment. It is not possible to invest directly in an index.

Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed herein are our opinions as of the date of this document. These opinions may not be reflected in all of our strategies. We do not intend to and will not endeavor to update the information discussed in this document. No part of this document may be (i) copied, photocopied, or duplicated in any form by any means or (ii) redistributed without Horizon’s prior written consent.

Other disclosure information is available at

Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC

©2022 Horizon Investments LLC

You are now leaving this website to go to