Will 5% Mortgage Rates Cushion the Housing Market?

Today, in the Calculated Risk Real Estate Newsletter: Will 5% Mortgage Rates Cushion the Housing Market?

A brief excerpt:

The following graph shows the year-over-year change in principal & interest (P&I) assuming a fixed loan amount since 1977. Currently P&I is up about 30% year-over-year for a fixed amount (this doesn’t take into account the change in house prices).

This is less than the 35% year-over-year increase average in June, but still up sharply.

YoY Change House PaymentIf we include the increase in house prices, payments are up more than 50% year-over-year on the same home.

The bottom-line is the recent decline in mortgage rates will help at the margin, but the housing market will remain under pressure with mortgage rates at 5% (fewer sales, slowing house price growth).

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

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