Rising interest rates are pushing up the cost of owning a home. See how average mortgage repayments are increasing in every US state.

Rising mortgage costs have dramatically increased the cost of owning a home across the US.

Annie Fu/Insider

• Mortgage rates have jumped from 3.22% in January to 4.67% by April, reducing affordability.
• In some states, average monthly housing costs increased by more than $500, according to the NAR.
• Check out our interactive map to see the differences across every US State. 

Rising mortgage rates are increasing the cost of owning a home across the US, with median repayments on homes in some states rising more than $500 between January and March, according to estimates by the National Association of Realtors. 

The average 30-year fixed mortgage rate rose from 3.22% at the start of January to 4.67% by the end of March, and has continued to rise since, adding to the monthly costs of paying off a home. Though costs are continuing to climb, they still remain low by historical standards, with these rate levels last seen in 2018.

In California, the median increase in mortgage costs between the start of January and the end of March, with a 10% down payment, was $560, with the median mortgage repayment in the state costing $3,540 a month.

It marks a general trend of falling affordability across the West Coast, with monthly median costs in Washington and Oregon rising by $430 and $400 respectively.   

But Nadia Evangelou, senior economist and head of forecasting at the NAR, said there were still "pockets of affordability" in rural states. In Arkansas, the median monthly price increase was $140, while states neighboring New York and New Jersey, like Connecticut and Pennsylvania, have seen comparatively mild rises. 

Why are mortgage rates rising across the US?

Mortgage rates have continued to accelerate this year after reaching record lows in 2021. One driver is increases in the federal funds rate, which has been raised twice by the US Fed already this year, with six more projected before the end of 2022 after inflation hit 8.5% last month.

That, Evangelou told Insider, has a ripple effect on the housing market: "The short term interest rate that the Fed sets is the rate at which banks borrow and lend to one another. While this is not the rate that consumers pay, a higher rate for banks tends to make borrowing more expensive for consumers." 

Evangelou said this eventually feeds into 10-year treasury bond yields, which are historically linked to mortgage rates, particularly the conventional 30-year fixed mortgage rate chosen by buyers. 

While some factors may slow the pace of interest rate rises, with an expected slowdown in inflation weakening the case for further rate increases, Evangelou said it was currently unlikely mortgage rates would fall back below 3% any time soon.

What has been the impact on the US housing market?

Evangelou said that rising borrowing costs had resulted in more than 9 million homebuyers being priced out of the market, as previously reported by Insider. It meant that a growing number of people were competing for a shrinking number of homes, with 125 households vying for one affordable home this year compared with 45 households for every affordable home before the COVID-19 pandemic.   

Insider's Jordan Pandy previously reported that the number of people rushing to lock in mortgages soared by 31% in March as borrowers attempted to keep their costs from rising further.

First-time homebuyers are facing an increasingly competitive market, with investor and all-cash purchases rising since the pandemic. Homebuyers told Insider they have been faced with difficult ultimatums, including rent-back agreements, which involve new owners paying for sellers to live in their homes rent-free for several months after completing a sale.  

But Evangelou told Insider that low housing supply, which has dropped to record levels this year, meant prices were unlikely to fall in the manner they did following the sub-prime mortgage crisis of 2008. Some economists agreed, telling Insider's Alcynna Lloyd that the market is very different from the last housing bubble.      

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