Forecasts Suggest Almost 13 Percent Rise in 'Typical Mortgage Payment' Over the Next Year

U.S. home prices have risen more than 6 percent over the last year, but the 'typical mortgage payment' has increased about 12 percent year-over-year due to higher mortgage rates.

When assessing affordability, focusing on changing home prices along with the change in the typical mortgage payment over the past year can provide more insight than analyzing home prices alone, per CoreLogic's latest research. In October 2017, the U.S. median sale price was 6.3 percent higher than a year earlier, but the typical mortgage payment was up 12.1 percent because mortgage rates had increased by more than 0.4 percentage points over that 12-month period.

While the inflation-adjusted typical mortgage payment has trended higher in recent years, in October 2017 it remained 36.2 percent below the all-time peak of $1,259 in June 2006. 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 October 2017, and the inflation-adjusted median sale price in June 2006 was $244,318 (or $199,900 in 2006 dollars), compared with a median of $212,680 in October 2017.

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