In an effort to combat inflation and the overheated housing market, the Federal reserve has decided to raise its benchmark by half a percentage point, which is the highest bump the country has seen in two decades. Mortgage costs are already up by more than two percentage points from the previous year, and many experts believe this could ease the competition for potential homebuyers and combat the scarcity of property listings.
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Families Putting More Towards Mortgage Payments
According to data from the National Association of Realtors, American families are spending roughly 5% more of their income on mortgage payments than they were paying last year. The average borrower with a $300,000 mortgage more paying almost $400 more a month than just a year ago.
Tough Times for Potential Buyers
“With much higher monthly payments, buyers who don’t have savings for a large down payment risk being priced out of the market,” said Joel Berner, senior economic research analyst from Realtor.com. “Unfortunately, this is occurring just as nationwide rents reach an all-time high, making saving more difficult for those looking to buy their first home.”
A leading cause of for the lack of purchases is the tightened supply of houses within the market. There is plenty of demand for houses since the pandemic and there is also of a rising number of people willing to buy with cash than ever before.
Wrap Up
Rising Mortgage payments and the lack of inventory in the housing industry is proving to cause stressful times for potential buyers. While the prices of houses may continue to rise it should begin to decelerate in the next couple of months. Talk with your accountant or advisor to find out if any adjustments should be made regarding your mortgage payments.