The typical U.S. homebuyer spends $758 per month, or 15.8 percent of the median household income, on a mortgage. It’s the most buyers have paid since 2010.
Zillow reports that as mortgage rates increase, affordability will become worse. In 2016, the average household income grew 2.2 percent (a slight slowdown from 2015), but an average household’s mortgage payment rose 9.9 percent, up from 6.7 percent in Q4 2015.
A decade ago, households would spend upwards of 25 percent of their incomes on a mortgage. If mortgages continue to rise and incomes continue to slow, the market could approach that level.
At 5 percent mortgage interest rates, it will take 17.9 percent of monthly income to afford a monthly mortgage payment on the typical U.S. home; at 6 percent, that rises to 20 percent of monthly income.