LOS ANGELES (AP) — Would-be homebuyers are willing to take on sharply higher mortgage payments, even as home prices have begun to pull back this year.
The median monthly payment listed on applications for home purchase loans jumped 14.1% in May from a year earlier to an all-time high $2,165, according to the Mortgage Bankers Association. The May figure also represents a 2.5% increase from April.
“Homebuyer affordability eroded further in May as prospective buyers continue to grapple with high interest rates and low housing inventory,” Edward Seiler, the MBA’s associate vice president of housing economics, said in a release last week.
The combination, along with a stubbornly low level of homes for sale, is driving mortgage payments higher, pushing the limits of what many homebuyers can afford.
Consider that two years ago the median national monthly payment on home loan applications was $1,320.48, or 63.4% less than what it was last month.
A recent forecast by Realtor.com calls for the average rate on a 30-year mortgage to drop to 6% by the end of the year. Lower rates could motivate some homeowners to sell, adding more sorely needed inventory to the market. However, lower rates could also spur more buyers to come off the sidelines, which would heighten competition and push up prices.
