The average monthly principal and interest (P&I) payment rose to the highest level on record in July, according to the September 2023 Mortgage Monitor Report from Black Knight.
Borrowers purchasing a home using a 30-year fixed-rate loan faced an average monthly P&I payment of $2,306 in July, a 60% increase compared to two years ago.
According to Black Knight, more than half of July purchase originations had a payment of more than $2,000 a month, up from just 18% two years ago. Additionally, nearly one-quarter of borrowers faced payments of more than $3,000, up from just 5% in 2021.
“We’ve been talking about affordability for quite some time now, but this puts the situation in stark relief,” says Black Knight vice president of enterprise research Andy Walden. “Rates aren’t just hampering prospective home buyers, though. While tappable equity levels have returned to near-record highs, rising rates are having a clear impact on how—and how much—equity mortgage holders are willing to withdraw from their homes.”
According to Black Knight, mortgage holders tapped $39 billion in equity in the second quarter via cash-out refinances as well as home equity loans and lines of credit, half the volume of $79 billion from the first quarter of 2022 before rates began to rise. From 2010 through 2021, mortgage holders withdrew an average of 0.92% of available tappable equity each quarter; the share has fallen to just 0.4% over the past three quarters.
“In essence, over the last 15 months, there’s been nearly $200 billion less equity withdrawn—and reinjected into the broader economy—than might otherwise have been, due in large part to elevated interest rates,” says Walden.
