Oftentimes, when we think about a mortgage payment, we think of it as a fixed cost. You have the principal-- the amount borrowed to purchase a home— and the interest, the fee charged by the lender. But when you look closer at your monthly statement, you’ll see that your total payment also includes property taxes and homeowners insurance.
Those taxes and insurance premiums are often paid through an escrow account. Your lender collects a portion of those expenses each month and pays the bills when they come due. While your interest rate may be locked in, the tax and insurance portions of your payment can change and that’s something many homeowners across the country, including here in the Nashville MSA, have started to notice.
Across the country, some homeowners have seen their monthly payments increase even though they didn’t refinance or take on a new loan. In many cases, the reason is rising escrow costs. The principal and interest portion of a fixed-rate mortgage has remained steady but increases in property taxes and homeowners insurance have pushed total payments higher in many markets.
At the national level, median monthly homeowner costs increased from $1,630 in 2019 to $2,074 in 2024, a 27 percent increase, according to data from the National Association of REALTORS®. In the Nashville MSA, the median monthly cost for homeowners with a mortgage rose from $1,517 to $1,984 over that same period, a 30 percent increase.
Over that timeframe, escrow costs rose as well, though not as rapidly. Nationally, combined monthly escrow expenses — property taxes and homeowners insurance — increased from $334 to $419, a 25 percent jump. Locally, the median annual property tax for homeowners with a mortgage rose from $1,782 in 2019 to $2,041 in 2024, a 14.5 percent increase, while homeowners insurance climbed from $1,220 to $1,562, a 28 percent rise.
As the data shows, escrow expenses increased substantially in dollar terms, but their share of total monthly costs changed little. In the Nashville MSA, that share declined slightly because overall housing costs rose faster at the same time. Elevated interest rates after the pandemic-era market, combined with significant home appreciation, led to higher borrowing costs that offset the relative impact of escrow increases.
If you’re a current homeowner or considering entering the market, it’s important to understand how escrow works and why it matters. Escrow costs are rising nationwide, and they can influence your monthly payment even when your mortgage rate stays the same. Understanding that balance can help consumers set realistic expectations and plan for long-term housing costs.
Jack Gaughan is president of Greater Nashville Realtors. A Realtor is a member of the National Association of Realtors who subscribes to its strict code of ethics. You can reach Jack at 615-478-0970 or jack.gaughan@gmailcom.
