One of the advantages to buying a home is that mortgage payments can be cheaper than renting — provided you have enough money saved up to afford a down payment and other costs of being of a homeowner. 

However, in spite of the fact that U.S. rental prices have risen in the past year, this rent growth was outpaced in recent months by increasing mortgage payments as home prices continue their upward trend. recent study from real estate brokerage Redfin.

To measure price growth, the study examined two indicators: The median monthly asking rent in all U.S. apartment types and the median monthly mortgage payment to new homeowners with less than 5% down. Since February last year, rents increased 15% annually while mortgages grew 31%.

According to Redfin data, the pace of growth in mortgage payments has increased since 2022.

However, rising mortgage rates have not led to fewer home buyers. Redfin chief economist Daryl Fairweather stated that “we haven’t seen any slowdown yet in the housing market and it may just be delayed with people still racing to purchase homes before mortgage rates rise even more.” 

This may be changing soon. As of Thursday, the average 30-year fixed rate mortgage was 4.53%. This is 0.6% more than last Friday. according to Bankrate. The rates were close to or higher than 4% since last February — the highest they’ve been since May 2019.

Some economists have responded to rising interest rates by adjusting their forecasts. lowering their sales forecastsCNBC’s Diana Olick reported on the outlook for the remainder the year. Redfin reports that home prices will slow down at a rate of 7% annually after last year’s double-digit price gains. most recent projections. 

Fairweather states, “I believe that mortgage rates will continue to rise and more people will decide to stay renting rather than buying. This will increase demand for rental property and maintain rent growth.”

Both renters and homeowners now pay more for their homes than ever before. It’s because the housing supply isn’t keeping up with demand.

Fairweather states, “We haven’t done much to fix the hole that we are in in terms of building new houses, and it will be a long process to get out of that hole.”

Fairweather expects buyers to be more in control of terms as the exuberant market for waived inspections, all-cash deals and other cash offers cools.

She says, “It will be more costly than it was at beginning of year but it may not be as stressful when it is time to make an offer on a house.”

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