Millennials already are dealing with saving for a down payment and improving their credit scores. Now higher interest rates are limiting how much they can borrow.
Realtor.com examined a new report from Fitch Ratings and found that rising interest rates have lowered the median size mortgage by 9 percent. With a 30-year fixed mortgage rate of 4.20 percent (up from 3.42 percent in October), and assuming a mortgage amount of $120,000, the new maximum mortgage amount borrowers 35 and under could qualify for would drop to $109,000.
Some costs are on the way down, but for many borrowers that isn’t enough to fully offset rate changes. The Federal Housing Administration, which insures mortgages that are popular with first-time home buyers, said Monday it is lowering annual mortgage insurance premiums on most new loans by 0.25 percentage point beginning on Jan. 27.