Given the increase in household borrowing costs since 2015, the average new homebuyer could expect to pay an extra $76,014, with a 30-year mortgage. That’s an average cost of about $2,534 per year.
“The consistent pattern of deficit spending that has been the norm in the United States for many years has driven up costs for families,” the researchers wrote.
These were arguably worthwhile, depending on your perspective, but the Yale Budget Lab is pointing out the age-old economic truism that remains relevant: there’s no such thing as a free lunch.
The report assumes a one-to-one pass-through, where 30-year mortgage rates rise in direct unison with long-term Treasury yields. It also assumes an economic rule where every 1% increase in the national debt raises interest rates by 0.02%. Since 2015, new laws have pushed the projected debt up by 49%, leading to a nearly 1% interest rate hike on the median home price, which was about $426,000 in the third quarter of 2025, which the study references as its baseline estimate.
“You could look at it as effectively a significant tax on mortgages,” Benn Steil, director of international economics at Council on Foreign Relations, who has authored research on the unsustainable trajectory of the national debt, told Fortune.
The report also outlines what housing costs could look like for new homebuyers given other scenarios where the interest rate is more or less sensitive to federal debt. Even if interest rates are less sensitive to federal debt, American homeowners could still expect to pay $57,347 more than a scenario without the added debt since 2015, or about $1,912 annually. Yet if it’s more sensitive, that amount shoots up to $112,640, or about $3,755 per year.
But it’s not just mortgages. The report found that, for an auto loan of 5.75 years, the calculated cumulative lifetime cost is about $670, or about another month’s worth of the average car payment. That’s $120 more per year as compared to a scenario without the debt increase. The debt impacts small business owners, too, accruing an estimated $7,723 cumulative lifetime cost on a 10-year small business loan, or $770 more annually.
These numbers are rising because when the national debt rises, the federal government jacks up borrowing costs, ultimately raising costs for you, the consumer. “You are competing with the federal government for the bank’s loanable funds,” Steil said. “The more money the federal government needs to raise, the more you’re going to have to pay when you want to raise money to finance a mortgage.”
This nearly 1-percentage-point hike in Treasury rates is particularly impactful for the housing market. “People most usually think of affordability in terms of what they’re paying for gas at the gas station or what they pay for eggs at the supermarket,” Steil said.“But they don’t typically think of it in terms of why a mortgage is costing them 7% rather than 6%.
He continued, “That’s actually very, very important to most families’ financial position, understanding that your mortgage is considerably more expensive than it would have been if the government had been more fiscally prudent.”
