rose

Apache is functioning normally

Mortgage credit availability barely increased in June as the industry continues to operate at reduced capacity. This is a consequence of persistently high mortgage rates resulting in lender consolidation as well as a decline in mortgage applications, the Mortgage Bankers Association said.

The trade group’s monthly Mortgage Credit Availability Index rose by 0.1% to 96.6 last month. A decline of the index, benchmarked to 100 in March 2012, indicates that lending standards are tightening while an increase suggests loosening credit.

“Mortgage credit availability was essentially unchanged in June, remaining close to the lowest level since early 2013, as the industry continues to operate at reduced capacity,” said Joel Kan, MBA’s vice president and deputy chief economist. “Lenders are streamlining their operations by offering fewer loan programs, with some exiting certain channels. Data from our Weekly Applications Survey indicated that June mortgage applications were more than 30 percent lower than a year ago and at the slowest pace since December 2022.”

Both the Conventional MCAI, which does not include loans backed by the government and the Government MCAI, which examines FHA, VA, and USDA loan programs, were unchanged. 

Of the two component indices of the conventional index, the Jumbo MCAI fell by 0.2% and the Conforming MCAI rose by 0.2%.

“The Jumbo Index declined slightly by 0.2 percent – the second straight monthly decrease – as liquidity conditions have been tightening for jumbo lending,” added Kan. 

The drop in mortgage credit availability follows a spike in mortgage rates last week, which rose to 6.81% as of July 6, according to Freddie Mac.

Source: housingwire.com

Apache is functioning normally

Mortgage credit availability barely increased in June as the industry continues to operate at reduced capacity. This is a consequence of persistently high mortgage rates resulting in lender consolidation as well as a decline in mortgage applications, the Mortgage Bankers Association said.

The trade group’s monthly Mortgage Credit Availability Index rose by 0.1% to 96.6 last month. A decline of the index, benchmarked to 100 in March 2012, indicates that lending standards are tightening while an increase suggests loosening credit.

“Mortgage credit availability was essentially unchanged in June, remaining close to the lowest level since early 2013, as the industry continues to operate at reduced capacity,” said Joel Kan, MBA’s vice president and deputy chief economist. “Lenders are streamlining their operations by offering fewer loan programs, with some exiting certain channels. Data from our Weekly Applications Survey indicated that June mortgage applications were more than 30 percent lower than a year ago and at the slowest pace since December 2022.”

Both the Conventional MCAI, which does not include loans backed by the government and the Government MCAI, which examines FHA, VA, and USDA loan programs, were unchanged. 

Of the two component indices of the conventional index, the Jumbo MCAI fell by 0.2% and the Conforming MCAI rose by 0.2%.

“The Jumbo Index declined slightly by 0.2 percent – the second straight monthly decrease – as liquidity conditions have been tightening for jumbo lending,” added Kan. 

The drop in mortgage credit availability follows a spike in mortgage rates last week, which rose to 6.81% as of July 6, according to Freddie Mac.

Source: housingwire.com

Apache is functioning normally

It’s been an up and down ride for mortgage rates over the past twenty-four hours. The FOMC minutes yesterday created some market jitters that moved rates higher, but then today we saw a reversal with rates moving back down toward levels that we saw at the start of the week. Read on for more details.

Where are mortgage rates going?                      

Rates move up after Fed minutes – back lower today

Yesterday we got the minutes from the Federal Open Market Committee’s meeting a few weeks ago.

Financial market participants across the nation were tuned in to see if there were any hints about the rate hike path in 2018, and to some extent, they weren’t disappointed.

Click here to get today’s latest mortgage rates (Jul. 11, 2023).

Optimism about the U.S. economy rang loud and clear through the minutes, with FOMC members revising their economic projections higher from the previous meeting in December.

The FOMC’s next meeting is about a month away in March, and the general consensus from investors has been that there will be a quarter point increase to federal funds rate at that time. Now, after the release of yesterday’s minutes, that decision is further bolstered.

We still have a decent amount of economic data that will come out between now and then, including the monthly jobs report for February and several inflation readings, but it’s hard to imagine a scenario where the numbers come in low enough to sabotage a March rate hike.

As one would expect, the market reacted swiftly to the FOMC minutes, with the yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) moving up to a multi-year high of 2.95% in afternoon trading.

Today, though, we’ve seen the markets settle down a little, with the 10-year yield moving back down to around 2.90%. That’s slightly above where it started the week. Mortgage rates typically move in the same direction as the 10-year yield.

Rates Rise in Freddie Mac Primary Mortgage Market Survey 

We got the latest Freddie Mac PMMS out today and it showed (surprise, surprise) that mortgage rates moved higher this week. Here are the numbers:

  • The average rate on a 30-year fixed rate mortgage moved up two basis points to 4.4% (0.5 points)
  • The average rate on a 15-year fixed rate mortgage ticked up one basis point to 3.85% (0.5 points)
  • The average rate on a 5/1-year adjustable rate mortgage rose two basis points to 3.65% (0.4 points)

Here is what the Freddie Mac’s Economic and Housing Research Group had to say about rates this week:

“Fixed mortgage rates increased for the seventh consecutive week, with the 30-year fixed mortgage rate reaching 4.40 percent in this week’s survey; the highest since April of 2014. Mortgage rates have followed U.S. Treasurys higher in anticipation of higher rates of inflation and further monetary tightening by the Federal Reserve. Following the close of our survey, the release of the FOMC minutes for February 21, 2018 sent the 10-year Treasury above 2.9 percent. If those increases stick, we will likely see mortgage rates continue to trend higher.”

Rate/Float Recommendation            

Lock in a rate soon

Mortgage rates have now moved higher for seven straight weeks. Since the start of the year the average rate on a 30-year fixed rate mortgage has increased by forty-five basis points.

Learn what you can do to get the best interest rate possible.

With mortgage rates expected to continue rising throughout 2018, we believe that it makes sense for most borrowers to lock in a rate on a purchase or refinance, sooner rather than later.

Today’s economic data:                               

Jobless Claims

Applications filed for U.S. unemployment benefits came in at 222,000 for the week of 2/17/18. That puts the 4-week moving average at 226,000.

Fedspeak

  • Fed Governor Randal Quarles at 12:15am
  • New York Fed President William Dudley at 10:00am
  • Atlanta Fed President Raphael Bostic at 12:10pm
  • Dallas Fed President Robert Kaplan at 3:30pm

EIA Petroleum Status Report

Notable events this week:                

Monday: 

  • Markets Closed: President’s Day

Tuesday:    

Wednesday:      

  • Fedspeak
  • PMI Composite Flash
  • Existing Home Sales
  • FOMC Minutes

Thursday:        

  • Jobless Claims
  • Fedspeak
  • EIA Petroleum Status Report

Friday:       

*Terms and conditions apply.

Carter Wessman

Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.

Source: totalmortgage.com

Apache is functioning normally

The Black Knight Mortgage Monitor for May doesn’t even hint at a housing crisis on the horizon. Affordability is again (or maybe still) a concern, but buyers are out there, and home prices reflect that fact. Homeowners are performing well on their mortgages (and aren’t about to give up their low rates), and while the current report doesn’t touch on the subject, continue to build on their equity. In addition, builders are getting back in the game, shoring up hope of a lessening in the perennial shortage of available homes.

Home prices, which eased late last year have now risen for five straight months, completely reversing the earlier declines. Black Knight says its Home Price Index hit an all-time high, rising 0.7 percent from April to May. While the year-over-year growth rate is currently hovering at 0.1 percent, the May increase is equivalent to annualized growth of 8.9 percent. If the recent pattern continues, that annual growth rate may turn and begin trending higher as early as next month.

Twenty-seven of the 50 largest U.S. markets have returned to their previous price peaks or set new ones this spring. Even the West Coast, where some of the largest downward corrections happened last year, saw many of its markets reheat in May. San Jose was up 1.4 percent, Los Angeles rose 1.0 percent, and Seattle gained 0.9 percent. Austin, Texas is a major exception to the price hikes. The deficit from its peak continues to grow, reaching -13.8 percent in May.

“There is no doubt that the housing market has reignited from a home price perspective,” according to Black Knight Vice President Andy Walden. “Firming prices have now fully erased the pullback we tracked through the last half of 2022 and lifted the seasonally adjusted Black Knight HPI to a new record high in May.

This, of course, means that affordability is taking a hit, fueled by rising interest rates as well as home prices. As of June 22, with 30-year rates at 6.67 percent, it required $2,258 per month in principal and interest to make the monthly payment on a median-priced home, given 20 percent down on a 30-year mortgage. This exceeds the previous high of $2,234 required last October.  Nationally, it takes 35.7 percent of median household income to make the average P&I payment. Only rising income since the fall of 2022 has kept May from being the most unaffordable month in the past 37 years.

Inventories continue to be the principal driver of home prices. For-sale listings have deteriorated in 95 percent of major markets this year and are at about half of pre-pandemic levels. Meanwhile, more than 60 percent of existing mortgage holders – and potential sellers – are sitting on first lien rates below 4 percent, with significant disincentive to list in this high-priced, low inventory, high-rate environment.

Still, prepayments (SMM or single-month mortality) rose by 23 percent in May to 0.54 percent, the highest level since September. Twenty-eight percent of prepayments were related to home sales, but all drivers rose by double digits. There were 22 business days in the month, two more than in April, which also accounted for a 10 percent increase in the SMM. Prepayments are still down 40 percent year-over-year.

Walden commented, “As it stands, housing affordability remains dangerously close to the 37-year lows reached late last year, despite the Federal Reserve’s attempts to cool the market. The challenge for the Fed now is to chart a path forward toward a ‘soft landing’ without reheating the housing market and reigniting inflation. But the same lever used to reduce demand – raising rates – has not only made housing unaffordable almost universally across major markets, but it has also resulted in significant supply shortages by discouraging potential sellers unwilling to list in such an environment, further strengthening prices. At this point, even if rates come down, but not so sharply as to entice potential sellers out of their sub-3.5 percent mortgages, it could risk a widespread reheating of home prices across the U.S.”

Walden sees welcome news in May’s residential construction data. “New construction starts and completions were both strong in May. However, most projects underway in the month were 5+ multi-family units, as opposed to single-family residential (SFR) units. SFRs made up just 40 percent of the total and is now at construction levels still approximately 30 percent below the 2005 peak.”

There is also good news on the mortgage delinquency front. The national delinquency rate fell 11 basis points (bps) in May to 3.10 percent, returning to a near-record low after a calendar-driven spike in April. The number of borrowers missing a single payment dropped by 94,000 or 9.5 percent erasing nearly half of the prior month’s increase. Loans 90 or more days past due, are down 30 percent year-over-year and within 1 percent of the post-Great Recession low in 2019.

Source: mortgagenewsdaily.com

Apache is functioning normally

Imagine it’s 30 April 1989. You just came into a hundred grand. You plan on investing this money for the next 20 years. Where do you put it?

Here are four options. No need to look them up on Morningstar (in fact, that would be cheating for today’s exercise). Just glance at them and choose which of the four you think would have been the best place for your money over the past two decades.

  • Fidelity International Discovery (FIGRX): Invests in larger companies headquartered outside of the U.S., mostly in developed countries.
  • Fidelity Real Estate Investment (FRESX): Invests in real estate investment trusts (REITs), real estate operating companies (REOCs), and small pigs (RUNTs). Just kidding on that last one.
  • Vanguard 500 (VFINX): An index fund that seeks to mimic the performance of the S&P 500 index of generally large U.S. stocks.
  • Vanguard Small-Cap Index Fund (NAESX): An index fund that seeks to mimic the performance of the MSCI U.S. Small Cap 1750 Index of small to middle-sized U.S. stocks.

Go ahead and choose one, and just one. Where would you have committed your money for the past 20 years? Got one? Great. Now, let’s see how they each performed since 30 April 1989, and how much your $100,000 would be worth today.

Fund Avg. Return $100K Turned Into…
Fidelity International Discovery 6.41% $346,605
Fidelity Real Estate Investment 8.13% $478,046
Vanguard 500 7.52% $426,704
Vanguard Small-Cap Index Fund 7.44% $420,637

Source: Morningstar Principia software, 4/30/1989-4/30/2009

Did you pick Fidelity Real Estate Investment, the fund with the highest return? My guess is you didn’t, not after what has happened in the real estate markets over the past few years. Perhaps you picked Fidelity International Discovery, since somewhere in the back of your mind is the recollection that international stocks beat U.S. stocks every year from 2002 to 2007. But that was the lowest-returning of our choices. And while it lost to the real estate fund by just 1.72% a year, that disadvantage resulted in $131,441 less wealth — an amount greater than the original $100,000 investment. Compound small amounts over many years, and you’re talking big bucks.

The power of diversification
Now, when I asked you to pick just one of these investments, you may have resisted. “I would never invest all my money in just one fund,” you might have said. “That’s too risky.”

You’re so smart.

But while you know that diversification lowers risk, did you know that it can also boost returns? Let’s see by creating a portfolio that is invested 25% in each of the aforementioned funds, and rebalance it annually. What do you think the average annual return on this portfolio would have been? Where would it rank among the returns of the four funds?

You can attempt to come up with an answer by doing a little math: Add up the returns of the funds and divide by four. That would give you 7.35%, which would have lagged all the choices except the international fund.

But here’s the real answer: The four-fund portfolio, rebalanced annually, would have earned an average 7.81% a year, turning $100,000 into $450,279. That beat three of the four choices; the sum exceeded most of the parts, so to speak.

How did that happen?

A bit of balance
While each of the funds posted similar long-term returns, they often rose and fell in different degrees, at different times. This didn’t happen each and every year; 2008 is a recent and painful example of how many investments can move in the same direction (i.e., down) at the same time. But looking over many years, some of these funds zigged while the others zagged.

Throw in some rebalancing — which entails selling what has done relatively well to buy what has not — and you’re often getting out of a hot asset class before it turns cold, and getting into a laggard that’s ready to become a leader. In fact, studies indicate that rebalancing annually is generally too much. Had we rebalanced our hypothetical portfolio every three years (something I can’t do with the otherwise excellent Morningstar software I used to run these numbers), I think the return of the four-fund portfolio would have been a tad higher.

Yes, it lagged the No. 1 performer (the real estate fund). But here’s the real beauty of asset allocation: You don’t need to identify what will be the very best investment (which is pretty hard, if not impossible). No fortune-telling skills are required. You get very respectable returns without paying a psychic or selling your soul.

Final notes
Finally, I’ll point out that I’m not recommending this exact portfolio or these exact funds; they were chosen because they have long-enough histories to examine (though I will say that I am partial to index funds, and own shares of the Vanguard 500). This is just an illustration of a neat little asset-allocation trick, which also works when you switch up the investments (as shown in this longer-term illustration).

A real-life portfolio should have even more assets, including bonds if you’re financially conservative or within a decade of retirement. But that’s a topic for another day.

For more investing information, check out The Motley Fool’s Rule Your Retirement service.

Source: getrichslowly.org

Apache is functioning normally

MCT said additional rate hikes are anticipated and may hamper origination volume, which they said is at “a new normal.”

MCT’s June data also shows a nearly 8% drop in total lock volume year over year. After hitting lows at the beginning of the year for purchase, rate/term refinance, and cash out refinance, each production type continues to creep slowly upward, MCT said.

Rhodes noted that economic reports will continue to have an outsize impact on the Federal Reserve’s decision making. The labor market is gradually moderating, but conditions remain too hot for the Fed’s liking.

Job gains were relatively solid yet again in June, with total nonfarm payroll employment reaching 209,000 jobs, compared to 339,000 in May, according to data released Friday by the Bureau of Labor Statistics. 

“If labor markets cool off, that could give the Fed a reason not to
raise rates in July,” Rhodes said. “This would provide a nice
bounce in the markets, but I’m not holding my breath.”

Fannie Mae reported earlier this month that recent housing market data suggests prospective borrowers have come to terms with high rates.

MCT’s Rate Lock Indices present a snapshot of rate lock volume activity in the residential mortgage industry broken out by lock type (purchase, rate/term refinance, and cash out refinance) across a broad diversity of lenders (e.g., sizes, products/services offered, business models) nationally.

Source: housingwire.com

Apache is functioning normally

The average 30-year-fixed mortgage rate rose 13 basis points to 3.01% for the week ending Sept. 30, according to Freddie Mac’s latest PMMS survey. Mortgage rates had been roughly flat for seven weeks, and this is the first time it rose above 3% since June.

Sam Khater, Freddie Mac’s chief economist, said in a statement that rates rose across all loan types, in conjunction with the 10-year U.S. Treasury yield, which also reached its highest point since June.

“Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation and emerging energy supply shortages which compound other labor and materials shortages,” Khater said.

According to Khater, mortgage rates are expected to continue to rise modestly which will likely
have an impact on home prices, causing them to moderate slightly after increasing over the last year.

The previous week, rates increased slightly to 2.88% from 2.86%, essentially the second consecutive month of consistent mortgage rates.

Lenders – Now is the time to prioritize lead generation

HousingWire Editor-in-Chief Sarah Wheeler and Deluxe Senior Business Development Executive Mark McGuinn discuss the challenges lenders are facing to optimize lead generation, even as mortgage rates continue to drop. 

Presented by: Deluxe

A year ago at this time, the 30-year fixed-rate mortgage averaged 2.88%. The 15-year fixed-rate mortgage averaged 2.28%, up from last week when it averaged 2.15%.

Mortgage rates have remained low in large part because of the Federal Reserve’s consistent monthly purchases of $120 billion in U.S. Treasury bonds and mortgage-backed securities. Last week, the central bank signaled it would reduce the program when substantial progress is made in the labor market. 

On Thursday, the Mortgage Bankers Association (MBA) showed that the central bank’s announcement quickly led to a rise in mortgage rates, impacting the behavior of buyers seeking their dream home or looking to reduce their monthly payments through mortgage refinancing.

According to the MBA, the mortgage loan application volume declined by 1.1% for the seven days ending Sept. 24. Joel Kan, associate vice president of economic and industry forecasting at MBA, said that Treasury yields increased due to optimism about the strengthening economy. In response, “mortgage rates rose across all loan types, with the benchmark 30-year fixed rate reaching its highest level since early July 2021,” he said.

Kan noted that the appreciation of home prices, which have steadily been going up for over a year now, had also depressed mortgage applications though the purchase market is still strong overall.

Source: housingwire.com

Apache is functioning normally

U.K. homeowners and would-be buyers have been beset by rising borrowing costs over the past year as the Bank of England has sought to get a handle on stubbornly high inflation.

Anadolu Agency | Anadolu Agency | Getty Images

LONDON — U.K. house prices fell at their fastest annual pace in 12 years in June as still escalating mortgage costs piled further pressure on the property market.

Property prices slumped 2.6% in the year to June, their biggest decline since June 2011 and a sharp increase on the 1.1% annual drop recorded in May, according to mortgage lender Halifax’s latest price index released Friday.

Prices were down for the third consecutive month, slipping 0.1% since May. The average U.K. property now costs £285,932 (£364,490), down from a peak of £293,992 in August 2022.

Kim Kinnaird, director at Halifax Mortgages, said the annual decline belies a slight recovery in prices this year following the cataclysmic fallout from the U.K.’s “mini budget” in October, which saw mortgage rates soar and property prices plummet.

“Average house prices are actually up by +1.5% (£4,000) so far this year, with most of that growth coming in the first quarter, following the sharp fall in prices we saw at the end of last year,” she said.

However, she added that “the housing market remains sensitive to volatility in borrowing costs.”

House prices have ‘further to fall’

Homeowners and would-be buyers have been beset by rising borrowing costs over the past year as the Bank of England has sought to get a handle on stubbornly high inflation.

The BOE raised interest rates for the 13th consecutive time in June, hiking by a surprise 50 basis points and taking the base rate to 5%. It came as U.K. core inflation rose month-on-month in May.

Lofty inflation and higher benchmark bank rates have pushed up U.K. sovereign gilt yields, which are used to price mortgages, prompting some lenders to increase rates or pull certain products all together.

The summer is likely to see price cuts become even more widespread, and we may well see house prices fall more significantly.

Sarah Coles

head of personal finance at Hargreaves Lansdowne

Sarah Coles, head of personal finance at Hargreaves Lansdowne, said the latest rate hike was not fully reflected in Friday’s housing data, likely spelling more pain ahead for borrowers.

“Two-year fixed rates started June just under 5.5% and five-year deals at 5.1%, according to Moneyfacts, and they ended the month at 6.4% and just shy of 6% respectively. All eyes will be on just how much damage may be done when new rates feed through into the figures,” Coles told CNBC.

Higher mortgage rates look set to add further downward pressure to the housing market, she added, with prices on track to fall further this summer.

Higher mortgage rates look set to add further downward pressure to the housing market in the U.K.

Nathan Stirk | Getty Images News | Getty Images

“Sellers have already started cutting prices to shift their properties. Zoopla figures showed one in 20 made a cut in May, averaging 9%. The summer is likely to see price cuts become even more widespread, and we may well see house prices fall more significantly,” she added.

Liam Bailey, head of global research at Knight Frank, agreed, noting that the domestic housing market has “further to fall in terms of pricing.” In its latest global housing index released Wednesday, the real estate company said U.K. house prices fell 3.1% annually in the first quarter.

“While lower prices will be welcomed by first time buyers, higher rates mean affordability will still be stretched for most new market entrants,” he said.

Mortgage rates continue to rise

The Bank of England is expected to continue its dogged efforts to tame inflation with further hikes through the rest of this year.

Market watchers now expect rates to hit a peak of 5.75% to 6% in November, though JPMorgan said Thursday that they could hit 7% “under some scenarios.”

“Markets have continued to ramp up bets in favour of higher Bank of England interest rates in the past few days,” Matthew Ryan, head of market strategy at global financial services firm Ebury, said via email. “Swap rates now see a terminal BoE base rate of 6.5% by mid-2024 — a total of 150 additional basis points of hikes.”

That leaves mortgage rates poised to rise further before coming down, adding to pain for homeowners and further exacerbating the U.K.’s worsening rental crisis as buy-to-let landlords pass on higher mortgage repayments to tenants or exit the market entirely.

“With markets now forecasting a peak in Bank Rate of over 6%, the likelihood is that mortgage rates will remain higher for longer, and the squeeze on household finances will continue to put downward pressure on house prices over the coming year,” Halifax’s Kinnaird said.

Source: cnbc.com

Apache is functioning normally

As the spring homebuying season comes to an end, there are distinct signs of the housing market reheating from a home price perspective. The lack of inventory drove home prices up, challenging potential buyers, Black Knight pointed out in its monthly mortgage monitor report. 

The reheating is widespread with more than half of the 50 largest U.S. markets seeing prices at or above 2022 peaks. On a seasonally adjusted basis, Black Knight’s home price index hit a new record high in May, having now fully reversed the correction in home prices seen late last year. 

Although the backward-looking annual growth rate sat at 0.1% in May, the exceptionally strong 0.7% month-over-month gain would equate to an annualized growth rate of 8.9%, Black Knight’s mortgage monitor report noted. 

That would mean the annual home price growth rate would remain at or near 0% for only a short time before inflecting and trending sharply higher in coming months, Andy Walden, Black Knight’s vice president of enterprise research, said. 

While prices are still well below peak levels across the West and in many pandemic boom towns, price firming in recent months has begun to close those gaps. 

Austin, Texas, is a notable exception. Inventory in Austin continues to run above pre-pandemic levels, putting downward pressure on prices, which have fallen to -13.8% below peak, the largest gap of any market. 

Just eight of the top 50 markets are currently more than 5% below their 2022 peaks.

The price jumps for homes comes down to the lack of inventory, the report pointed out. 

For-sale listings deteriorated in 95% of major U.S. markets in 2023. Active listings are still down more than 50% from pre-pandemic levels.

“New construction starts and completions were both strong in May, which is welcome news. However, most projects underway in the month were 5+ multi-family units, as opposed to single-family residential units,” Walden said. 

Single family residential units account for just 40% of the total number of projects underway. 

“As it stands, housing affordability remains dangerously close to the 37-year lows reached late last year, despite the Federal Reserve’s attempts to cool the market. The challenge for the Fed now is to chart a path forward toward a ‘soft landing’ without reheating the housing market and reigniting inflation,” Walden noted.

The same lever used to reduce demand – which is raising rates – has made housing unaffordable across major markets and resulted in significant supply shortages by discouraging potential sellers unwilling to list, further strengthening prices, Walden explained.

As of June 22, with 30-year rates at 6.67%, the principal and interest (P&I) payment needed to buy the median-priced home rose to $2,258, marking the highest payment on record.

Factoring in current income levels, only about 35.7% of median household income makes the average P&I payment.

It would take a 30% drop in home prices to get back to normal affordability, according to the report. Alternatively, if prices stayed the same and rates fell to 5%, it would take 19% income growth to get the market back to normal affordability. 

“At this point, even if rates come down, but not so sharply as to entice potential sellers out of their sub-3.5% mortgages, it could risk a widespread reheating of home prices across the U.S,” Walden said. 

Source: housingwire.com