In the U.S. presidential election of 2024, housing inflation is an important consideration for voters. As housing is a long-term investment, it has to do with mortgage rates. The graphs and the calculation are an effort to show the increase in mortgage payments the medium house price of 2020 compared to that of 2023.
Economic activity was much reduced by the coronavirus epidemic and interest rate was gradually lowered. When in 2021, inflation started to raise, the Federal Reserve Bank stated to increase interest rate in 2022.
Mortgage rate increased as shown in the following chart.
Housing prices after the covid increased due to demand for work at home. This increase is shown in the following chart.
The effects of increase in mortage rate and housing price price are reflected in the mortgage payment increase of the midum house prices of 2020 and 2023. Seee chart below.
The above chart shows that there was a difference in medium price of house. This house represented by the two periods is mostly likely different.
The following charts shows the difference in interest payment with the same amount of mortgage.
The interest payment is proportionately more because a larger portion of the early instalments have to be allocated to interest.
For information, a 1% interest rate change for a loan of $100,000 for 30 years is $321.64.
It is quite a surprise that housing price still increased quite substantially in the past few years. It may be attributed to supply and demand. Only a recession would force down housing price.
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