Looking to buy a home in Alabama anytime soon?
Your mortgage will likely be significantly higher than a year ago due to interest rate hikes, according to a recent analysis by Construction Coverage.
According to the analysis, Alabama was the 10th-most affected state by recent interest rate hikes in the nation.
Mortgage payments were up 69% year-over-year in Alabama. That's slightly higher than the national average of 66%. Florida saw the biggest increase at an approximately 81% increase in mortgage payments.
"On a regional level, the Southeast has experienced some of the largest increases in mortgage payments from last year," said Jonathan Jones, a senior researcher at Construction Coverage. "Out of the entire U.S., Florida homebuyers have been the most impacted by rising interest rates: mortgage payments for a median-priced home in Florida have increased by over 80% from 2021. South Carolina is close behind, with mortgage payments going up by 76%. While mortgage payments have risen dramatically across the U.S., the increase has been the smallest in Idaho and California, where mortgage payments have gone up by 52.3% and 56.3%, respectively."
Jones said in his analysis that "mortgage interest rates are now more than double what they were in early 2021."
"As a result, rising home prices have started to slow down, but not by enough to offset the increased borrowing costs caused by higher rates," Jones said. "Home prices rose dramatically across the U.S. during the pandemic, and now, in some parts of the country, homebuyers are feeling the pain of both high mortgage rates and expensive housing."
The Auburn-Opelika metro area saw the biggest percent change in mortgage payment in Alabama year-over-year at nearly 82%. That was the 13th-largest year-over-year increase among all metro areas in the nation, according to the analysis. A mortgage payment in Auburn-Opelika is currently $1,453, up from $800 a year ago. The median home price is $287,662.
"At the beginning of the COVID-19 pandemic, the Federal Reserve took aggressive actions to help keep the economy afloat," Jones said. "Mortgage interest rates began to fall steadily, and the average 30-year fixed rate reached a historic low of 2.65% in January 2021. However, inflation began climbing rapidly, and the Federal Reserve started raising interest rates in March. When gradual rate hikes weren't enough to tamp down inflation, the Fed began moving more aggressively. In November, the average 30-year fixed rate briefly topped 7%, the highest it's been in more than two decades."
The mortgage payment for a median-priced home in Alabama is currently $1,099, up from $650 one year ago. The median home price in Alabama is currently $217,551, according to the study.
According to the study, the median home price was calculated from Zillow's Home Value Index, and the monthly mortgage payment for a median-priced home was calculated by assuming a 30-year fixed-rate mortgage with a 20% down payment.
To connect with the author of this story, or to comment, email [email protected].
Don't miss out! Subscribe to our newsletter and get our top stories every weekday morning.