Current 30-year fixed mortgage rates are at 5.12%, and they may continue to rise closer to 6%, says Bill McBride in the CalculatedRisk Newsletter, but despite recent gains, rates are still historically low. The Fed Funds rate is expected to rise to roughly 3.25%, and at its peak, the yield curve will flatten and the 10-year treasury rate will likely match the Fed Funds rate.
Higher mortgage rates are wiping out housing affordability across the nation in an already record-breaking market, and with more increases to come, creating more affordable housing will remain a top priority for the months and years ahead.
Higher rates will impact affordability. Based on today’s mortgage rates, affordability has declined to levels not seen since the housing bust).
However, it is important to understand that if mortgage rates double - say from 2.5% to 5.0%, monthly payments do not double. For this example, principal and interest payments would increase about 35%, and if you include taxes and insurance (PITI), payments will increase about 25%. This is a huge increase, but payments do not double when mortgage rates double.
Related Stories
Multifamily
Lebron James I Promise Program Opens New Akron Housing Complex
A LeBron James-backed I Promise affordable housing complex opened its doors to 50 families in Akron, Ohio, this week
Housing Policy + Finance
Pittsburgh Urban Redevelopment Authority Increases Investment for Affordable Housing
The redevelopment authority recently advanced a $42 million bond issue to fund new affordable housing projects
Government + Policy
Home Building Professionals Call on Congress to Address Housing Issues
More than 700 home building professionals marched on Capitol Hill this week to urge Congress to address key issues impeding new affordable housing production
