Home affordability got even worse last month as the average payment on a new mortgage jumped
- The median new mortgage payment rose about 1% last month, per the Mortgage Bankers Association.
- That's due to higher mortgage rates and home prices, which have created affordability barriers in the market.
Home affordability got even worse last month, with the average payment on new mortgages rising from the prior month.
The national median payment applied for by purchase applicants rose to $2,112 in April, up about 1% from March, according to the Mortgage Bankers Association.
Meanwhile, the ratio of mortgage payments to income also rose, reflecting that national mortgage payments have increased though income has declined or stagnated.
"Homebuyer affordability eroded further in April, with both the typical borrower monthly payment and median purchase amount rising due to higher rates and home prices," MBA's associate vice president Edward Seiler said in a statement on Thursday.
"Elevated interest rates and low housing supply have kept many prospective borrowers on the sidelines. However, MBA expects mortgage rates to stabilize and inventory levels to improve, which should incentivize some buyers to reenter the market."
Experts have warned the housing market is in deep-freeze, with high mortgage rates creating a slowdown in sales. Last week, the average 30-year fixed mortgage rate topped 7% for the first time since March, according to Bankrate – a high cost of borrowing that has discouraged Americans from purchasing new homes.
High rates have also discouraged existing homeowners from putting their home up for sale. That's kept inventory low and buoyed home prices, exacerbating affordability barriers.
Experts say affordability is unlikely to get better until mortgage rates begin to ease. But mortgage rates are influenced by real interest rates in the economy, which could stay elevated all year as the Fed continues to tame inflation.
Central bankers raised rates over 1,700% in the past year to lower high prices, with markets currently pricing in 60% chance of another 25 basis-point rate hike in June, per the CME FedWatch tool.
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