Mortgage Payments on the Rise

CoreLogic reports that mortgage rates have gone up one half percentage since last summer, meaning payments for many home buyers have increased at roughly double the rate of home prices over the past year.

The typical mortgage rate, a metric reflecting the interest rate-adjusted monthly payment based on each month’s U.S. median home sale price, has increased by 13.9 percent since last year. At the same time, the median home sale price was up 6.7 percent from a year earlier.

Forecasts from IHS Markit call for mortgage rates, inflation, and income to rise gradually over the next year, and the CoreLogic Home Price Index forecast suggests the median sale price will rise 3.0 percent in real terms. Based on these projections, the inflation-adjusted typical mortgage payment would rise from $845 this July to $975 by July 2018, a 15.5 percent year-over-year gain. Real disposable income is projected to rise about 3.6 percent over the same period, meaning next year’s homebuyers would see a larger chunk of their incomes devoted to mortgage payments.

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