# How Much Will Higher Mortgage Rates Increase Your Payment?

With mortgage interest rates skyrocketing, how much will higher mortgage rates increase your payment?

I was thinking about this and decided to do some math specific to Bakersfield to get a real sense of how those of us local to Bakersfield are affected by the jump in interest rates.

As of today, the median home listing is \$366,00 according to real estate website Realtor.com. Interestingly, the median sales price is \$378,500, which means that buyers are still bidding for properties, and paying over asking price. I do think this is coming to an end soon (maybe?). For historical context, 1 year ago the median listing price was \$309,900, with a median sales price of \$318,000. This means the median sales price of a home in Bakersfield increased 19%(!) year over year.

Median housing prices in Bakersfield on June 16, 2022. Courtesy realtor.com.

As for mortgage rates, 1 year ago the average interest rate for a 30 year fixed mortgage was about 2.5%. It is now about 6% after the Fed raised its base interest rate by 75 basis points (.75%), which trickles down to to interest rates paid by consumers for auto loans, credit card debt, and, yes, mortgages.

So let’s do some basic math.

Without factoring in things like mortgage insurance, property taxes, and homeowner’s insurance, the monthly principal and interest payment for the median house in June, 2021 would be \$1,219. The monthly payment for the same house right now would be \$2,201! The same house purchased now instead of this time last year is now \$1,000 more per month! For the exact same house!

Let’s look at some other numbers.

In January 2022, the median home sales price was \$365,000. The mortgage interest rate was about 3.27%. Let’s run the numbers again.

We already know that to buy the median priced home in Bakersfield right now costs about \$2,201 per month, NOT counting escrow, etc. On January 1 of this year, you would pay \$365,000 for the house, and have an interest rate of about 3.29%. This means your principal and interest payment would be \$1,549. In other words, the monthly payment for that house you would have purchased in January 2022 has gone up \$652 per month. Just by waiting 6 months!