According to the Mortgage Bankers Association, the median mortgage payment in the U.S. increased in October, but at a slower pace than the previous month.
The national median mortgage payment rose 3.7% to $2.012, up from $1,941 in September.
“Prospective homebuyers continue to feel the effects from higher mortgage rates in October with the 70-basis point jump in rates leading the average monthly mortgage payment to rise to a survey high of $2,000.” Edward Seiler is the MBA’s associate vice president of housing economics. He is also the executive director at the Research Institute for Housing America.
According to the MBA, these increases are due to three months in the summer when buying a house was more affordable. Seiler stated that August’s affordability improvement was likely due to “slightly lower mortgage interest rates” and steady income growth.
Buyers are limited by high mortgage rates.
High mortgage rates have made it more difficult to buy a home. Seiler stated that they are “squeezing potential buyers’ purchasing power.”
Mid-September saw mortgage rates surpass 6% for only the second time since 2008. Mortgage rates reached 7.08% by October’s end, the highest level since April 2002. Rates have fallen below 7% since then.
Seiler stated that October’s median loan amount was $295,000. This is the lowest level since January 2021.
Seiler said that “weakening affordability” and economic uncertainty would likely slow homebuying activity over the last two months.
Positive movement in the housing market
According to Freddie Mac’s Primary mortgage market survey, last week, the average 30-year mortgage interest rate fell to 6.61%.
According to Redfin’s Deputy Chief Economics Officer Taylor Marr, potential homebuyers could return to the market in light of this news. However, this will not be apparent until there is “more consistent evidence over time of slowing inflation, and a larger, steadier decline mortgage rates.” Taylor Marr stated in a statement.
Marr stated that “Pending sales and new listing may cease to decline, but they won’t see a significant boost until there is more certainty about the Fed’s efforts at curbing inflation.”
The Federal Reserve increased interest rates by 75 basis points in November to try and lower inflation. After inflation increased 7.7% annually in October, compared to 8.2% in September, this was done.
Marr said that serious buyers who want to buy a home quickly could feel confident about pinning a deal on the house this week. They could save up to $100 per month if they sign the contract a week before. “Casual buyers might want to wait for a few months as we have reason to believe that inflation and high rates will soon recede and that monthly payments will fall further.”