“Short of a war or stock market crash…” New PIKOLINOS Size 7.5 VERONA Cognac Brown Ankle Boots 38 EurMr/Ms Hoka Speedgoat shoes Outstanding features International choice Preferential priceMiz Mooz Womens Fritz Slip On Loafer Shoe Pewter Size 38 M USSC35 Barbbee Ballet Flats 295, Gold, 8 US , Boohoo Womens Embellished Clear Strap 2 Part Heels , Mr/Ms Anthropologie De Mer Wedges Reliable quality online shop Seasonal hot saleMen's/Women's Jimmy Choo New market buy various kinds , Sanita - Wood-Urban Open Oil Leather - Antique BrownCOLUMBIA PEAKFREAK LOW WOMEN'S TRAIL SHOES #BL3749-990 RET.$120. , Vans X Lazy Oaf Classic Slip On Checkerboard Women's Size 6.5 () () , Nike Incursion Mid Basketball/Casual Shoes Sz 9.5 , NEW Nike Vapor Untouchable Football Cleats Black Red 698833-016 Sz 12 , New Balance Men's Running 860 v6 M860GY6 Yellow Green Gray 10EE 9D 10.5DNike Air Force 1 Low USA Independence Day 2014 Limited Edition Rare Size 13Nike Air Jordan True Flight VI Retro Sneakers Black Red 342964-002 Mens SZ 12 , NIKE AIR JORDAN DELUXE BLACK/GYM-RED- GREY 807717-061 MEN'S SIZE: 9.5,10 ONLY , NIKELAB ZOOM FLIGHT 95 "JASON KIDD" PEARL PINK-COBBLESTONE SZ 12 [941943-600] , Men/Women jordan 12 gamma blue Size 9.5 Packaging diversity Reliable performance Complete specificationsDan Post Men's Sidewinder Western Cowboy Leather Boots DP2233 TanNike SB Lunarendor Snowboard Boots - 586532-041 Black Blue Mens Size 9 , Johnston & Murphy Mens Leather Cap Toe Oxford Shoes 13 D(M) BlackStacy Adams Men's Valet Velour Bit Slip Loafer - BurgundyASICS Womens Gel-Flux 5 Running Shoe, Mid Grey/White/Opal Green, 9 B US , Ladies Skechers Ultra Flex Bright Horizon Jogging Fitness Yoga Trainer All SizesWomens Nike Air Max 97 Light Bone Deadly Pink Mushroom White SZ 7.5 (921733-004) , NIKE AIR MAX 270 WOMEN's CASUAL GUAVA ICE - TERRA BLUSH - RACER PINK NEW IN BOXTECNICA Vintage Boots Women's Size 6.5 Warm Insulated Winter Gray/Black #B1657Fashion Womens Pointy Toe Block High Heels Suede Over The Knee High Knight BootsWomen Over Knee High Thing Boots Stretchy Block Heels Pull On Casual Shoes SizeNEW $325 TORY BURCH AMELIE SUEDE SHEARLING LOGO VICUNA SAND BEIGE BOOT 5 ,

Nike Zoom Mariah Flyknit 001 Racer Mens Running Mens Trainers 918264 Nike Sneakers Shoes 001 a8387ca - ishanyadance.com

This month, Arch Mortgage Insurance released their spring Housing and Mortgage Market Review. The report explained that an increase in mortgage rates and/or home prices would impact monthly payments this way:

  • A 5% increase in home prices increases payments by roughly 5%
  • A 1% rise in interest rates increases payments by roughly 13% or 14%

That begs the question…

What if both rates and prices increase as predicted?

The report revealed:

“If interest rates and home prices rise by year-end in the ballpark of what most analysts are forecasting, monthly mortgage payments on a new home purchase could increase another 10–15%. That would make 2018 one of the worst full-year deteriorations in affordability for the past 25 years.”

The percent increase in mortgage payments would negatively impact affordability. But, how would affordability then compare to historic norms?

Per the report:

“For the U.S. overall, even if affordability were to deteriorate as forecasted, affordability would still be reasonable by historic norms. That is because the percentage of pre-tax income needed to buy a typical home in 2019 would still be similar to the historical average during 1987–2004. Thus, nationally at least, even with higher rates and home prices, affordability will just revert to historical norms.”

What about home prices?

A decrease in affordability will cause some concern about home values. Won’t an increase in mortgage payments negatively impact the housing market? The report addressed this question:

“Even recent interest rate increases and higher taxes on some upper-income earners didn’t slow the market, as many had feared…Short of a war or stock market crash, housing markets could continue to surprise on the upside over the next few years.”

To this point, Arch Mortgage Insurance also revealed their Risk Index which estimates the probability of home prices being lower in two years. The index is based on factors such as regional unemployment rates, affordability, net migration, housing starts and the percentage of delinquent mortgages.

Below is a map depicting their projections (the darker the blue, the lower the probability of a price decrease):

“Short of a war or stock market crash…” | Simplifying The Market

Bottom Line

If interest rates and prices continue to rise as projected, the monthly mortgage payment on a home purchased a year from now will be dramatically more expensive than it would be today.

Real Estate News, , , ,
Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *