Recent research from CoreLogic shows that the “typical mortgage payment” in the U.S. has been outpacing growth in home prices over the past year. The “typical mortgage payment” is adjusted every month according to the average mortgage rate and current median home sale price.
While the median home price in the U.S. is up almost 7% in the past year, the “typical mortgage payment” has increased almost 10%. For homebuyers, this means committing a larger percentage of their paychecks towards mortgage payments.
- The “typical mortgage payment” has increased almost 10% over the past year
- Mortgage rates will rise another 46 basis points between March 2018 and March 2019
- Homebuyers are devoting an increasing percentage of their paycheck towards mortgage payments
While the U.S. median sale price has risen by just under 7 percent over the past year the principal-and-interest mortgage payment on that median-priced home has increased nearly 10 percent. Moreover, the CoreLogic Home Price Index Forecast suggests U.S. home prices will be up 5.8 percent year-over-year in March 2019, while some mortgage rate forecasts suggest the mortgage payments homebuyers face will rise twice that much.
A consensus forecast suggests mortgage rates will rise by about 0.46 percentage points, or 46 “basis points,” between March 2018 and March 2019. The CoreLogic HPI Forecast suggests the median sale price will rise 3.9 percent in real terms over that same period (or 5.8 percent in nominal terms). Based on these projections, the inflation-adjusted typical monthly mortgage payment would rise from $859 in March 2018 to $942 by March 2019, a 9.7 percent year-over-year gain (Figure 1). In nominal terms the typical mortgage payment’s year-over-year gain would be 11.7 percent.
An IHS Markit forecast calls for real disposable income to rise by just over 3 percent over the next year, meaning homebuyers would see a larger chunk of their incomes devoted to mortgage payments.
View the original article at CoreLogic’s Insights Blog