I created a couple of charts/matrices to illustrate the affect that rapid rise in interest rates had on monthly payments, which in turn affects affordability. I'm guessing many BP visitors don't raalize the real differences, but they are sobering when you see actual #'s Mortgage rate data from FRED Economic Data (St Louis Fed).

As of Jan 6, 2022, the average 30yr fixed mtg rate = 3.22%, and rose to 6.48%, as of jan 6, 2022, 1 year later.

Rounding the rates to 3.25% and 6.5%, respectively, and using $100k loan amount, calculates to a payment of:

$435.21 as of Jan 6, 2022
vs
$632.07 as of Jan 5, 2023

That's a 45% increase in payment or a 31% decrease in borrowing power ($100k loan amt payment @ 3.25% = $68,854 loan amt pmt @ 6.5%)
Note: the above #'s are not reflected in my charts, since the charts start at 3%.

One assumption I have is that some of the price rise in the past couple of years, is due to unsupported demand fueled by the unusually low past rates. And that those prices did not reflect a true value of many properties, in a normalized market. And the market will take some time to stabilize to within typical affordability bounds. Not necessarily a crash, but a slowdown of increases and probably price declines in some markets. There are other factors involved of course.

Thoughts?