Mortgage payments for recent buyers reach high point

The 31% increase in mortgage rates over the past six weeks drove the typical monthly loan payment up 15% during the same period, reaching a new high point, Redfin said.

Rates for the 30-year fixed mortgage hit 6.7% in the most recent Freddie Mac survey, up from 5.13% for the week of Aug. 18.

This drove the monthly mortgage payment on a median asking price home to a record high of $2,547, up from a recent low of $2,210 for the four week period ended Aug. 14, Redfin said. It is also up 50% from $1,698 a year earlier, when mortgage rates were 3.01%.

Redfin made the calculation using a 20% down payment for the principal and interest portion, plus a 1.25% annual property tax rate and a homeowner’s insurance rate equal to 0.5% of the purchase price.

The median asking price of $384,750 for newly listed homes was 10% higher from the previous year.

“It’s important to remember that much of the housing market data and neighborhood comparables being reported are based on home purchases that were agreed to a month or more ago when mortgage rates were a point and a half lower,” Taylor Marr, Redfin’s deputy chief economist, said in a press release. “Sellers should anticipate that buyers are unwilling or unable to pay a price similar to what their neighbor’s home sold for a month ago, and buyers should connect with their lenders to find ways to mitigate the impact of rising rates.”

Those options for buyers include locking in the interest rate now, switching to an adjustable rate mortgage or tightening their budget so they don’t end up with an unaffordable payment, Marr continued. Some are already following that advice; ARM application submission rose back above a 10% share in the most recent Mortgage Bankers Association survey.

The median home sale price was $369,250, for the four week period ended Sept. 25, up 7% year over year.

“The challenges homebuyers face in today’s market go beyond the dwindling affordability caused by high mortgage rates and home prices,” Marr added in an accompanying blog post. “The whiplash in mortgage rates between when homebuyers set their budget and when they make an offer is also making it extraordinarily difficult to plan ahead.”

While the supply of homes for sale increased to three months, the highest level since June 2020, new listings were down 21% from a year earlier. This indicates that the supply is being boosted by homes that are difficult to sell.

Approximately 35% of homes are selling within two weeks of listing, unchanged from the prior four week period, but down from 40% one year prior. Within one week, 24% have an accepted offer, also unchanged from the prior four weeks, but four percentage points lower than the same time in 2021.

“The good news for people who can still afford to buy a home and are set on making a purchase now is that they should be able to refinance to a lower rate in a year or two,” said Justin Dimler, a regional sales manager at Redfin’s mortgage unit Bay Equity, in the blog post. “I advise house hunters who qualified for a loan one or two months ago to get requalified by their mortgage adviser because the change in mortgage rates may mean they’re no longer eligible to borrow as much as before.”

Homes that sold during the four-week period were on the market for a median of 31 days, up from 24 days a year earlier and the record low of 17 days set in May and early June.

Meanwhile, 32% of homes sold above list price, down from 46% a year earlier. It is the lowest level since February 2021.

On average, a record high 7.6% of homes for sale each week during the period had a price drop, up from 3.8% a year earlier.