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7
THE
MORTGAGE
BURDEN
Rising home prices have proven
detrimental to homeownership for many
buyers across some of the largest markets.
However, new data suggests that the typical
mortgage payment homebuyers face is far
outpacing the rise in home prices. Andrew
LePage, Research Analyst at CoreLogic
indicated an 11 percent jump in buyers'
mortgage payments by 2019.
e principal-and-interest mortgage
payment recorded an upward spike by
more than 16 percent, while nationally;
the median price paid for a home has risen
by less than 6 percent over the past year.
LePage pointed out that September 2019
will see a rise in prices by almost 5 percent
on an annual basis, according to CoreLogic
Home Price Index Forecast. However,
some other forecasts project a further rise in
mortgage payments homebuyers around the
same period next year, he stated.
Typical mortgage payment—a mortgage-
rate-adjusted monthly payment based
on each month's U.S. median home sale
price, is helpful in measuring the impact of
inflation, mortgage rates and home prices on
affordability, according to LePage. Typical
mortgage payments are strong indicators
of affordability as "it shows the monthly
amount that a borrower would have to
qualify for, to get a mortgage for a median-
priced U.S. home," he said.
e U.S. median sale price during
September 2018 at $221,697 increased by 5.6
percent annually, whereas a 0.8-percentage-
point rise in mortgage rates over that
one-year period led to a sharp rise in typical
mortgage payment by 16.4 percent. e
CoreLogic HPI Forecast anticipates the
median sale price to rise by 2.7 percent in
real, or inflation-adjusted, terms between
September 2018 and 2019. ese projections
also indicate that typical monthly mortgage
payment will record an 8.9 percent year-
over-year gain.
Quoting an IHS Markit forecast,
LePage pointed out the possibility of a rise
in real disposable income by 2.6 percent
over the next year—a trend that will see
homebuyers spending a larger share of their
incomes on mortgage payments.
