December 1st, 2018 10:24 AM by Jackie A. Graves
While there have been signs recently that the market may be shifting toward the favor of home buyers, prices are still on the rise in many areas around the
country. The median sales price in July was $230,411, up 5.8 percent year over
But if your buyer
clients are hoping to wait it out, you might want to remind them that mortgage
rates are also increasing. The typical mortgage payment jumped 13.1 percent
over that same one-year period, due to a nearly 0.6 percentage point
increase in mortgage rates, according to new data from CoreLogic, a real estate
rates are expected to keep rising, too. CoreLogic researchers predict a nearly
10 percent increase in buyers’ mortgage payments by next July, twice the rate
expected for home prices. Rates are expected to increase by about 0.43
percentage points between July 2018 and July 2019. Housing forecasters predict
median home sale prices to continue to rise by 1.8 percent in real terms over
that same period.
these projections, CoreLogic researchers predict the inflation-adjusted typical
monthly mortgage payment to rise from $937 in July 2018 to $1,003 by July 2019.
Furthermore, real disposable income is expected to increase by only around 2.5
percent over the next year. That means “home buyers would see a larger chunk of
their incomes devoted to mortgage payments,” CoreLogic researchers note.
the typical mortgage payment, CoreLogic researchers use Freddie Mac’s average
rate on a 30-year fixed-rate mortgage with a 20 percent down payment (not
factoring in taxes or insurance). The typical mortgage payment standard is used
to help judge affordability since it shows the monthly amount a borrower would
have to qualify for to get a mortgage to purchase a median-priced U.S. home.
while mortgage payments are on the rise, they’re still low by historical
standards, CoreLogic researchers note. In July 2018, the typical
inflation-adjusted mortgage payment still remained 26.8 percent below the
all-time peak of $1,280 in July 2006. The average mortgage rate in June 2006
was 6.7 percent compared to 4.5 percent in July 2018.
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