Mortgage rates top 7%, adding $268 a month cost for the same median-priced home

(The Center Square) – Mortgage rates have climbed to 7.40% from 6.16% since President Donald Trump said in January he was instructing Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds.

The climb runs against a federal push to lower rates.

Orphe Divounguy, founder and chief economist of Quantitative Research Group and a former Zillow economist, said the rise in rates drives up the mortgage costs for homeowners.

Running the numbers on a median-priced home with 20% down, Divounguy found that principal and interest rises from about $2,067 a month at 6.3%, roughly where rates sat in April, to $2,335 at 7.5%, slightly above where they are now.

That is about $268 more each month, or roughly $3,200 a year, for the same house.

Divounguy said most of the recent increase came from rising Treasury yields rather than the mortgage market itself.

The income needed to qualify under a standard benchmark that caps housing costs at 28% of income climbs from about $88,600 to $100,100, before taxes and insurance. Divounguy cautioned those are affordability benchmarks, not lender underwriting estimates, which also account for debts and credit.

U.S. existing-home sales rose 1.5% in September to a seasonally adjusted annual rate of 3.99 million, but contract signings fell to their lowest level since 2014, outside the early pandemic.