Buying a luxury home is getting pricier thanks to mortgage rate increases

Analysis of data shows the hikes are adding hundreds to payments for high-end US resi properties

TRD New York /
Apr.April 05, 2018 02:30 PM

Luxury apartment on Central Park

Incremental increases in mortgage rates are adding hundreds of dollars in monthly costs for homebuyers, particularly high-end homebuyers.

The average monthly mortgage payment is up 13 percent as of last month compared to the year before, according to data cited by the Wall Street Journal. That translates into a $241-per-month increase on homes in the top 10 percent of the market and a $168-per-month increase across the board.

A quarter of a percent increase up to 4.6 percent on a $1 million, 30-year fixed rate jumbo loan would increase monthly payments by $151, according to the newspaper. The median sales price in the luxury market in many of the country’s top markets is near or well above that.

In New York, where the median price in the top 10 percent of the market is around $1 million, the quarter percent increase between February and March added $418 to a monthly payment, up to $6,530. In Los Angeles, a monthly payment on the median $1.4 million sale price shoots payments up by $460-per-month.

The Federal Reserve raised rates by a quarter of a percent to between 1.5 and 1.75 percent late last month in the first meeting chaired by new Chairman Jerome Powell. Four additional quarter-percent increases are expected this year and three next year.

Numbers gathered by Inside Mortgage Finance show the mortgage rate increases are hurting refinance originations — they were down by 35.6 percent by dollar volume in 2017 year-over-year — but new buyers appear to be moving to lock in rates or are simply unfazed by the increases, as purchase originations were up 10.6 percent during that same period. [WSJ]Dennis Lynch

Related Articles

Here are the week’s top luxury sales

Here are the week’s top luxury sales

Clockwise from left: John D. Rockefeller, Izzy Englander, Steven Mnuchin, David Koch, Jacqueline Bouvier, and William Zeckendorf (Credit: Getty Images and StreetEasy)

For 15 years, David Koch lived at the world’s “richest building”

Here are the week’s top luxury sales

Here are the week’s top luxury sales

Refinancings spur mortgages to record high

The mortgage industry is booming

Keeping lawns freshly cut and outdoor spaces in tip-top shape could result in greater rewards for sellers. (Credit: iStock, IMDB)

Curb your enthusiasm: Homes with spruced-up outsides sell at premium

Elsa Segura (left) was arrested in connection to realtor Monique Baugh's (right) murder (Credit: iStock)

Second suspect charged in real estate agent’s abduction, murder

Clockwise from top left: John Gomes, Ronita Kalra, Eric Beniam and McKenzie Ryan (Credit: Getty Images, iStock, Wikipedia)

“We’re putting ourselves in situations where anything is possible”: Real estate agent’s killing rattles industry

Sarah Jessica Parker and Matthew Broderick's townhouse is on Charles Street (Credit: Getty Images, Google Maps)

Sarah Jessica Parker, Matthew Broderick shopping $19M townhouse