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Mortgage Payments up 30% from 2022 Across U.S.

Today’s homebuyers’ monthly mortgage payments are almost 30% higher than year-ago buyers due to higher mortgage rates.

TAMPA, Fla. – Increased mortgage rates across the United States means increased monthly payments for homebuyers. According to new data on mortgage payments from Redfin real estate, payments are up almost 30% from March 2022.

Redfin’s data shows that as of March 5, the typical monthly mortgage payment hit an all-time high of $2,563, compared to $1,988 in March 2022. The company said it’s a 29% increase from a year ago, and that the rise of mortgage rates is coming even as home prices have started to fall.

Home affordability changes mean the average buyer has to look for a cheaper house or settle in to wait.

Mortgage rates hit 6.73% last Thursday, according to federally-backed mortgage company Freddie Mac. Mortgage Daily News, an industry mortgage tracker, reported the Thursday mortgage rate on their daily tracker was 6.76%. Both rates are for 30-year fixed rate mortgages.

According to Redfin, current rates and budgeting needs put the average price for a homebuyer at $376,000 for a house, rather than the previous cost of $400,000 a month ago, when mortgage rates were about 6%. Compared to 2022, Redfin said spending power has declined “dramatically” as a result of lower mortgage rates, which at the time were 3.85%.

“High monthly payments are deterring would-be homebuyers and sellers who want to hang onto their relatively low rates,” Redfin reported. “Pending home sales declined 16.1% year over year and were essentially flat from a week earlier, defying seasonal trends; pending sales typically increase throughout March. New listings of homes for sale dropped 21.7%, the biggest decline in two months.”

Redfin Deputy Chief Economist Taylor Marr said the impact of inflation on mortgage rates and the housing markets is still large. Pointing to announcements by the U.S. Federal Reserve that it would be implementing a larger basis point increase for interest rates, Marr said homebuyers and sellers are “ultra-sensitive” to the rate fluctuations.

“Rates starting to decline would likely bring some buyers and sellers back,” Marr said. “Rates rising would push more away.”

Signs of a stronger market?

Based on the more than 400 metro areas Redfin surveyed for their latest mortgage data, the company said homebuyer demand was up 16% compared to last fall’s low, and pending sales are not going down as fast as in November.

Mortgage applications, according to the Mortgage Bankers Association, are also increasing. MBA said that as of March 3, applications had gone up 7.4% compared to the week before. The MBA also said mortgage delinquency for multifamily and commercial residences were low, even as loans increased.

“Commercial and multifamily mortgage delinquency rates remained low at the end of 2022,” Jamie Woodwell, MBA’s head of commercial real estate research, said. “There were slight upticks among loans in CMBS, life companies, and banks and decreases for Fannie Mae and Freddie Mac, but the overall performance remained positive. It is likely that as higher interest rates and softer property values work through the system this year – prompted by maturing and adjustable-rate loans – loan performance will adjust.”

Still, federally-backed mortgage lender Fannie Mae reported affordability concerns retain their impact as high prices and worries over job security abound for Americans.

“While both components remain positive on net, in February 44% of consumers reported that it’s a bad time to sell a home, up from 39% last month,” Fannie Mae said. “24% expressed concern about losing their job in the next 12 months, up from 18% last month.”

The company’s senior vice president and chief economist, Doug Duncan, said the lower purchase sentiment score was due to caution from current market conditions, driven by “a substantial decrease in consumers’ sense of home-selling conditions.”

Duncan continued, saying the home-selling sentiment was near an all-time low, and lower than pre-pandemic levels.

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