Mortgage rates have gone up in 2018 overall. If they continue, many homebuyers will be forced to shrink their budgets.
MartketWatch reports that as mortgage rates have risen (from about 4.15 percent in January 2018 to 4.63 percent today), a household earning the national median income went from being able to afford a $393,700 home to now only being able to afford a $373,000 home. This is if the homeowner wants to keep their housing-related expenses at or below the recommended one third of their monthly income.
With rates only expected to rise in 2019, affordability will continue to shrink. If the interest rate on a 30-year mortgage were to increase to 6%, a household earning the median salary would only be able to afford a home worth $319,200. Some 50,000 homes across the U.S. would therefore be out of reach to these households.
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