Homeowners are paying more for insurance and taxes than their mortgages, studies show

A large number of homeowners are spending more on insurance and property taxes than on their mortgages, according to a troubling new study.

Home insurance prices have skyrocketed as natural disasters and rising repair costs have pushed up rates, while property taxes have risen as home values ​​have risen, according to an analysis by the Intercontinental Exchange.

That combination resulted in 32% of the average single-family mortgage payment in September going to property taxes and home insurance, the highest rate ever for data dating back to 2014, the study found.

The burden has been heaviest for homeowners in two upstate New York cities — Rochester and Syracuse — as well as Omaha, Neb., New Orleans and Miami, according to the study, which was first cited by Wall Street Journal.

At least a quarter of mortgage holders in those cities spend more than half their monthly payment on taxes and insurance, the study found.

In Rochester, 35% of homeowners who have taken out mortgages on their properties spend more than half of their monthly payment on taxes and insurance.

In Syracuse, the rate is 34%.

The five cities mentioned are known for high property taxes or expensive home insurance — or both.

Rochester, a city of more than 200,000 that sits on the shores of Lake Ontario, has an average property tax rate of 2.95%, which is significantly higher than the national average of 0.99% and the New York State average of 2.39%. according to Ownwell.com.

Syracuse’s average property tax rate is also high relative to the national and state average – 1.93%.

In New Haven, Conn., more than one in five homeowners — 21% — pay more for taxes and insurance than their mortgage each month.

Meanwhile, private insurers have pulled out of Miami and New Orleans because claims from hurricanes and tropical storms don’t offset high premiums.

Nationwide, taxes and insurance account for more than half of the mortgage payment for 9% of single-family homeowners, according to the Journal.

In 2014, this number was less than 4%.

Mortgage rates continue to remain relatively high despite the Federal Reserve cutting interest rates three times this year.

The average rate for a standard 30-year fixed mortgage was 7% on Tuesday — up 0.21% from last week.

The average rate for a 15-year fixed mortgage is 6.27% – which is up 0.16% from a week ago.

While mortgage rates have fallen from their 2023 highs, average rates are unlikely to fall below 6% for a while, according to experts.

“Mortgage rates won’t come down as much as we expected, and affordability will still be a challenge,” Lisa Sturtevant, chief economist at real estate agency Bright MLS, told CNET.com.

President-elect Donald Trump pledged during the campaign to lower mortgage rates to around 3% – where they were before the start of the coronavirus pandemic in the spring of 2020.

Sales of new single-family homes fell to their lowest level in nearly two years in October, likely as rising mortgage rates put buyers on the sidelines and hurricanes disrupted activity.

Sales of new homes fell 17.3% to a seasonally adjusted annual rate of 610,000 units in October, the lowest level since December 2022, the Commerce Department’s Census Bureau said.