According to a recent Zillow report, monthly mortgage payments are getting more affordable for most Americans. In fact, Zillow reports that mortgage rates for U.S. homeowners have actually hit all-time record lows.
However, the Zillow report is not all sunshine and roses, as the real estate expert’s analysis also revealed that there’s a catch. According to Zillow data, even though mortgage payments are decreasing, the fact remains that American homeowners are still having trouble getting into homes in the first place. The reason for this schism is that would-be buyers face extraordinary price growth in total home prices—prices far above the average American's income (more so than we’ve seen in the past several years). This makes coming up with a down payment incredibly difficult.
To get a good idea of the situation, Zillow revealed that homeowner households earning a median income for American workers reported shelling out 17.5% of their total earnings to use toward a mortgage during the month of September. This figure was down from the 19.6% that was reported just two years ago.
And as for the record-low mortgage rates that were mentioned above, specifically, those have dwindled down to 2.8% this month. This is an impressive decrease from October 2018’s much higher rates that hovered around 4.85%.
Zillow senior economist Chris Glynn commented on the current predicament facing American homeowners today, even with falling mortgage rates: "The path to homeownership, and the savings and wealth-creation benefits that come with it, has gotten harder for many buyers. Saving for a down payment is the single biggest challenge many potential homebuyers face, and it is especially difficult when incomes fail to keep pace with home values.”
Glynn added: “Even still, many buyers sense that prices will slip further out of reach in coming years and desperately want to lock in low mortgage rates while they can, which is likely contributing to the urgency we're seeing in the market. The current environment is a double win for longtime homeowners who have enjoyed big equity gains and are now able to refinance their mortgage to lower their monthly payments."