Most understand that rising interest rates means higher monthly payments for new home buyers. That narrative has been all over the media.

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Many may not realize that building equity as rates rise takes a lot longer. This is important to understand because home equity is often a large portion of individual wealth.

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Consider an example of a $360k mortgage.

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At a 2% interest rate, your monthly payment is $1330. Incredibly, your very first mortgage payment pays more towards principal than interest.

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At a 7% interest rate, your monthly payment is $2395. It’ll take 242 payments until principal paid is greater than interest. For those keeping score, that’s just over 20 years!

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Point is, rising rates doesn’t just affect the payment amount. Wealth creation is stalled dramatically.

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I felt compelled to create a graphic on this. It’s a missing narrative out there.

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