DAILY REAL ESTATE NEWS | TUESDAY, FEBRUARY 20, 2018
If mortgage rate forecasts pan out, home buyers might see their mortgage payments grow by 15 percent this year, according to a new analysis by CoreLogic, a real estate data firm.
CoreLogic economists predict that mortgage rates will increase by about 0.85 percentage points between November 2017 and November 2018. The median sales price of a home is projected to increase 2.6 percent in real terms over that same period.
Based on that, CoreLogic researchers predict that the inflation-adjusted typical mortgage payment will increase from $804 in November 2017 to $910 by November 2018, a 13.3 percent year-over-year gain. In nominal terms, CoreLogic researchers say the typical mortgage payment’s year-over-year increase would be 15.5 percent.
As such, home buyers could see a larger portion of their incomes devoted to mortgage payments.
Still, adjusted for inflation, the average mortgage payment puts homebuyers’ current costs at historical ranges, CoreLogic researchers note.
“While the inflation-adjusted typical mortgage payment has trended higher in recent years, in November 2017 it remained 36.4 percent below the all-time peak of $1,263 in June 2006,” CoreLogic reports at its Insights blog. “That’s because the average mortgage rate back in June 2006 was about 6.7 percent, compared with an average rate of 3.9 percent in November 2017, and the inflation-adjusted median sale price in June 2006 was $245,259 (or $199,900 in 2006 dollars) compared with a November 2017 median of $212,460.”
Source: “Forecast Suggests Homeowners’ ‘Typical Mortgage Payment’ Could Rise Over 15 Percent this Year,” CoreLogic Insights Blog (Feb. 15, 2018)