Seattle mortgage rates have increased 35% since last year

An aerial view of Laurelhurst, an upper class residential neighborhood in Seattle. Lake Washington sits on the left and Union Bay on the right. 

Education Images/Universal Images Group via Getty

Mortgage prices for the typical U.S. home have soared to an all-time high, surpassing a previous record set in the summer of 2006, according to a new report from Zillow.

Seattle homeowners are not immune. The report said that monthly mortgage payments in the city have risen 35% since January of last year. That increase has resulted in homeowners paying an average of $675 more per month, bringing the average monthly mortgage payment in Seattle to a whopping $2,615.

Zillow analysts say these skyrocketing costs could impact prospective buyers in several ways.  

“This is likely to push buyers to seek out lower-priced homes, whether that means [buying] smaller homes or condos, [moving] to more affordable neighborhoods, or even pulling up stakes and moving to a more affordable region,” Zillow spokesperson Alex Lacter said in an email. “For others, it might mean delaying a home purchase altogether, whether to save for a bigger down payment or hoping rates will fall.”  

The top chart shows how much Seattle homeowners have spent each month on their mortgage payments over the years. The bottom chart shows how much mortgage rates have increased in the city over time. 

The top chart shows how much Seattle homeowners have spent each month on their mortgage payments over the years. The bottom chart shows how much mortgage rates have increased in the city over time. 

Zillow

Lacter also said such costs could worsen the ongoing shortage of available homes.

“This also may deepen the inventory drought if existing homeowners who bought or refinanced at rates below 3% decide to hunker down for now, rather than pay more in interest to trade up in today’s conditions,” he said.

The coronavirus pandemic drove mortgage rates to an all-time low, and there are several reasons they’re again on the rise. Those include a rebounding economy; high inflation; a sharp rise in the 10-year Treasury yield, which is closely tied 30-year mortgage rates; and reports from the Federal Reserve that say several interest rate hikes are imminent.

The Zillow report said an average U.S. buyer could have expected to pay $855 per month if they purchased a home in January 2021 with a 20% down payment and 30-year, fixed mortgage rate. But if they made that same purchase last month, analysts say, they would be paying $1,162 per month. The report said that 31% increase in the buyer’s monthly payment, wrought by rising home costs and higher mortgage rates, is the highest increase on record.

This all means Seattle residents could be in for a one-two punch if they’re looking to buy a home. Housing costs alone have risen 23% in the city since last year, Lacter said. Buying a home for $733,600 — the average home price in Seattle — and paying it off during a time of record-high monthly mortgage rates is likely not feasible for many, especially first-time buyers.  

Steep mortgage rates are the latest twist in Seattle’s increasingly expensive housing market. A recent report from Zumper found that rent costs for one- and two-bedroom apartments experienced regular month-over-month increases in 2021, resulting in high year-over-year increases. Between January 2021 and last month, average rent prices for one-bedroom apartments in the city jumped 26.5%, while the average rent price for a two-bedroom apartment increased by 26%.

These trends indicate that Seattle’s housing market, which turned red-hot last year, shows no signs of cooling so far in 2022.  

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