Falling mortgage rates, slower home-price growth, and modest income gains mean that home affordability has improved for many buyers.
Home prices might be slightly up, but rates are down and that means American mortgage payments are actually falling. In fact, according to new data, the average monthly mortgage payment has decreased over six percent in the last year. It’s the first time in almost three years that the typical mortgage payment has dropped.
The current typical mortgage payment is nearly 32 percent lower than the all-time high, reached in June 2016. At the time, rates averaged around 6.7 percent.
It sounds like the dip in payments isn’t just a one-time thing. In fact, it is estimated that the next year will see typical mortgage payments drop by about 4.4 percent per month.
Slower home-price growth
Median home sale prices are up 3.3 percent over the year, but falling mortgage rates have negated their impact. Rates have fallen almost a full percentage point in the last twelve months.
Modest income gains
Beyond the typical mortgage payment’s decline over the past year, many homebuyers are better off this year because of at least modest annual income gains. Increases in real personal disposable income averaged about 3.3% during the first two quarters of this year.
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