Mortgage payments are significantly outpacing home values, according to a recent report from CoreLogic. CoreLogic indicates that while the median price paid for a home nationally had risen by just over five percent year over year as of October 2017, the principal-and-interest mortgage payment on that median-priced home had increased by 17 percent, mainly due to the 2018 rate hikes.
CoreLogic notes that other forecasts have indicated a slower pace of mortgage payment rises in 2019, closer to seven percent, based on a 4.8 percent annual gain in home prices by October 2019 according to the CoreLogic Home Price Index Forecast, and a 0.2-percentage-point gain in mortgage rates over that period, based on an average of six rate forecasts.
Using the “typical mortgage payment” calculated using Freddie Mac’s average rate on a 30-year fixed-rate mortgage with a 20 percent down payment, CoreLogic also measured affordability. According to the study, the national median sale price in October 2018 – $218,733 – was up 5.2 percent year over year, while the typical mortgage payment was up 17.0 percent because of a 0.9-percentage-point rise in mortgage rates over that one-year period.
CoreLogic predicts the median sale price will rise 2.5 percent in real, or inflation-adjusted, terms over the year ending October 2019, and the real typical monthly mortgage payment would rise from $918 in October 2018 to $963 by October 2019, a 4.9 percent year-over-year gain, while another forecast indicates that real disposable income will rise by just under 3 percent over the next year, indicating homeowners will be paying more out of their income toward mortgage payments.
When adjusted for inflation, mortgage payments are still trending lower than the all-time peak. In October 2018, it remained 28.0 percent below the all-time peak of $1,275 in June 2006.
For info, visit CoreLogic here.