Crippling mortgage rates are forcing estranged couples to continue living together after breaking up because of the rising costs of buying a new home.
Eye-watering figures, which peaked at almost eight percent last month, mean divorced women are now faced with the prospect of spending hundreds or in some cases thousands of extra dollars a month simply to get away from their ex-partner.
However, for many people, this simply isn’t an option – or it’s not worth the money – leading a growing number of divorced couples to struggle through uncomfortable life situations to save an average of $7,000 a year.
Soon-to-be-divorced couple Danielle and Michael Tantone chose to stay in their Mesa, Arizona, home for months after their divorce because neither could afford to buy it out.
Soon-to-be-divorced couple Danielle and Michael Tantone (pictured together) chose to stay in their Mesa, Arizona home for months after their divorce because neither could afford to buy it out.
The Tantones purchased their $600,000 Mesa home (pictured) in July 2022 with an interest rate of 5.62 percent. But they are divorcing now, amid twenty years of high mortgage rates
The average 30-year interest rate rose to 7.57 percent on Oct. 12, according to data from government-backed lender Freddie Mac.
That’s what the couple said Wall Street Journal they bought their $600,000 home in July 2022 with an interest rate of 5.62 percent – and the property’s value has since fallen, meaning they would make a loss if they sold it.
They first bought the detached two-storey family home with the plan to refinance when mortgage rates fell. But now that they’re divorcing, amid twenty-year high mortgage rates, it’s a different story.
“It’s currently worth less than we paid for it, so we’re forced to go short,” Danielle, a 49-year-old nurse, told the WSJ.
The couple remains on good terms, and they continued living together for two months until things became unbearably awkward for them and baffling for their daughters.
Danielle told the WSJ that she was moving into a rental home she found on Facebook, while Michael, a 50-year-old insurance salesman, is staying in their family home until it is sold.
“We are negotiating with the bank to accept a price lower than the house is worth,” he said.
But many couples have also ruled out renting, as the cost of rental contracts has also skyrocketed in recent years – and that often comes with additional deposit and furnishing costs.
Ana Lia Eyzaguirre told the WSJ that she sacrificed a clean break from her ex-husband for a three-year financing plan due to high mortgage rates, leaving them with few other options.
Eyzaguirre said they struck a deal in which she bought out 40 percent of his equity in their Phoenix, Arizona, home with a 3.25 percent mortgage interest rate, while agreeing to pay the rest within three years.
“If the rates hadn’t been so high, I would have sold the house and moved somewhere in town or refinanced,” she told the WSJ.
According to the U.S. Bureau of Labor Statistics Consumer, the average single person spent about $48,000 annually in 2021, including $17,899 on housing. Expenditure research.
By comparison, the average married couple spends about $76,000 annually, of which $24,811 is spent on housing – $12,405.50 per person.
This means that married people who live together spend almost $5,500 less on housing costs each year.
And the singles tax has skyrocketed since then – with Zillow analysis this year It shows that individual residents now spend an average of $7,000 compared to joint residents, thanks to rising house prices and rental costs.
The online real estate marketplace said the amount of this ‘singles tax’ varies widely depending on where they live.
When Bill de Blasio and his longtime wife Chirlane McCray announced their divorce in July, they said they would continue living together — but less than three months later, the former New York mayor had moved into a swanky bachelor pad in Central Park.
But this is a luxury that many ordinary Americans living in New York simply cannot afford.
NYC tops the charts for the average price of living alone in a one-bedroom apartment, with single people paying $19,000 more each year than someone living in the same place with a partner.
This rises to an eye-watering $24,000 in Manhattan, the Big Apple’s most expensive borough.
In San Francisco, newly divorced couples would have to pay an average of $14,000 more to live alone than together in the same bed.
According to the Mortgage Bankers Association, home purchase applications fell 5.7 percent in the week to October 4 – the lowest level since 1995
The average long-term mortgage remains above 7 percent and reached its highest point in more than twenty years in August.
According to data from the Atlanta Federal Reserve, this means households are facing the least affordable housing market since 2006.
Additionally, U.S. credit card debt has risen to $1 trillion for the first time in history.
The Atlanta Fed found that credit card balances increased by $45 billion in the second quarter of the year.
Experts called the amount ‘staggering’, with figures also revealing that the number of delinquencies on credit cards had reached an 11-year high.