Despite easing mortgage rates providing a window of opportunity for borrowers and lenders, insurance costs continue to weigh on borrowers’ budgets, playing an outsized role in rising homeownership expenses.
The average annual property insurance payment for single-family mortgage holders climbed to nearly $2,370 in July, or 9.6% of average monthly mortgage payments inclusive of principal, interest, taxes and insurance. That is the highest share on record, according to the latest mortgage monitor report published Monday by ICE Mortgage Technology.
“That rapid escalation now means insurance alone consumes almost one in every ten dollars spent on average mortgage-related costs,” noted Andy Walden, head of mortgage and housing market research at ICE, in a press release.
Nationally, the average insurance payment on mortgaged single-family homes rose 4.3% over the first half of 2025, lower than the 7.3% gain in the first six months of 2024. Since the beginning of 2020, property insurance costs have increased by an average of 70% compared to increases of 23% for principal, 27% for interest and 27% for property taxes. Insurance costs are currently 11.3% higher than they were last July.
Despite surging insurance costs, a decline in mortgage rates in August helped push overall home affordability to its best level since last September, ICE noted in the report, though the improvement was modest. It required 31.1% of the median household income to make the mortgage payment on an average priced home last month, only slightly below the March reading of 31.3% and well above the long run average of roughly 25%.
ICE also noted home prices firming slightly after several months of softening, with the annual home price growth rate holding at 1.1% in July. “That said, more than 40% of markets still saw prices edge lower on an adjusted basis in August, down from more than half of markets in July,” ICE noted.
Reduction in costs for equity withdrawals, especially among second-lien home equity lines of credit (HELOCs) helped to boost equity withdrawals to $52 billion in the second quarter, the highest quarterly equity extraction since the third quarter of 2022. The monthly payment on a $50,000 HELOC, which reached as high as $412 in early 2024, has dropped more than 25% over the past 18 months to $302 entering the third quarter, according to ICE.
