“Short of a war or stock market crash…” Nike Free RN 2017 Lightweight Run Mens Running Shoes Runner Sneakers Pick 1 , 100%Auth BNIB Onitsuka Tiger x Andrea Pompilio camouflage studs Sneaker ShoesWomens Horsebit Leather Backless Loafer Slide Mule Slip On Shoes Slippers 2018Ana Lublin Women's Grey Platform Flat Slip-On Shoes Metallic Side Elastic BandKENZO WOMEN'S LEATHER SLIP ON SNEAKERS NEW BLACK A25Vince Camuto Women's Annaley Ballet Flat - Choose SZ/ColorFashion Wpmens Bowknot Rivet Studded Banquet High Heel Chunky Shoes Pull On PumpLife Stride Women's Camille Slide Blue Polyurethane HeelsBordello Women's Teeze 23 White/Black Patent Heels$1299 Dsquared Shoes Pink Leather Size US 7 IT 37 Huge 8365Fitflop Uberknit Toe-Thong Sandals M46-001 Black White Sandals Medium Women , ASICS GEL-Exalt 4 Black - Mens - Size 10 D , NIKE Men's Air Versitile Nubuck Basketball Shoe, Black/Metallic Dark Grey/Dark , Nike Air Max Advantage 2 Men's Black/Anthracite A7396002 , Nike Lebron 9 IX Low Fireberry Shoes Mens 8.5 Silver blue , Reebok Trainex 6 Inch Waterproof Puncture Resistant Sport Boot Size 13 W , AUTH AMERICAS CUP PRADA SNEAKERS SHOES PS0906 WHITE NEW US 10.5The Original MuckBoots Adult Chore Steel-Toe Boot - Choose SZ/Color , Man's/Woman's SISTERE Men's Shoes 309839 Black Consumer first a wide range of products Very good classificationGeorgia Men's Giant Romeo Steel toe GS262 Work Boot , 1883 by Wolverine Men's Made In The Usa Peninsula Winter Boot - Choose SZ/Color , men's shoes D' ACQUASPARTA 8 () sneakers gray suede AB871-DSHOES152) CHAUSSURE MARKOWSKI A 2 BOUCLES / 9 / 43 FR TBE BI- BOUCLE , Giorgio Brutini 250794-2 Mens Rampart Slip-on LoaferUS/- Choose SZ/Color. , Bally Slip-On Men Shoes 9.5 Brown Bit LoafersNIKE AIR ZOOM PEGASUS+ 32 CP Coral Orange 6.5 37 EUR, $145 CP , Women's NEW BALANCE FRESH FOAM 1165 Sz 7 B Fitness Walking Shoes Purple WW1165PP , Womens CROFT & BARROW Wide Calf Tall Riding Boot Knee High BLACK sz 8 WIDE WIDTH , Chinese Laundry Women's Ultra Wedge Boot, Black Suedette, Size 7.5 Mb9zTrendy Winter Over Knee Shoes Womens Cute Ball Furry Lined Slim Heels Shoes US11


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 *