The Housing Market just hit a level not seen since 2007

The financial sting of soaring home prices—up 32.6% over the past two years—was lessened, to a degree, by historically low mortgage rates during the pandemic. Even as prices soared, many buyers' monthly payments remained reasonable. Those days are behind us: Now that rates have returned to pre-pandemic levels, new homebuyers are starting to feel the full weight of record prices.

Back in December the average fixed rate sat at 3.11%. A borrower who took out a $500,000 mortgage at that 3.11% rate would've seen a monthly principal and interest payment of $2,137. Now that the average rate is up to 4.72%, a new loan at that size would equal a $2,599 monthly payment. Over the course of 30 years, that's an additional $166,106.

This jump in mortgage puts homebuyers in the worst position since 2007. At least that's according to one metric produced by Black Knight, a mortgage technology and data provider.

Affordability is plummeting

The recent climb in mortgage rates has put buyers in the worst position since 2007 from an affordability standpoint, according to data firm Black Knight. Based on current mortgage rates, the typical U.S. household would have to spend 29% of its monthly income to make a mortgage payment on an average-priced home. The last time affordability took such a hit was 2007.

Now to be clear, when we talk about affordability, we're referring to new or first-time home buyers, not existing property owners. Since many buyers are locked into fixed-rate mortgages, rising rates shouldn't impact them. If anything, today's homeowners have it pretty sweet -- they're sitting on record levels of home equuity they can tap as needed.