Increasing Mortgage Payments Effecting Homeowners
Mortgage Payments now account for a higher percentage of a homeowner’s monthly budget than ever before.
Homeowners now spend around 15.8 percent of their median household income on housing, up from 14.7 percent a year ago, according to real estate marketplace Zillow. Sarasota Mortgage Broker
Chris Luis says there are two main reasons for that,
“The first reason is housing prices have gone up,” Luis said. “Last year was the first year the price of homes had reached levels before the crash back in 2007. So, you’ve seen prices of homes go up 20-30% in the last 2 to 3 years.”
Luis says mortgage rates have also increased.
“I would say about half a point,” Luis said. “What makes that difficult for people is one, they’re not able to refinance, so if they’re looking to bring down their mortgage payments, they have
a harder time refinancing.”
It’s also difficult for first time homebuyers, President of the Realtor Association of Sarasota and Manatee Xena Vallone says she’s seen the effect of rate increases firsthand.
“I saw a difference in November when they were quoted one price,” Vallone said. “And then when they closed last week of a different interest rate looking at approximately $58 more a month in their monthly payment.”
Vallone says it’s not stopping people from buying homes.
“Housing is the American Dream,” Vallone said. “It’s the thing people prefer over anything else. They prefer to have a little bit of ownership.
Monthly Rental rates are also increasing.
“As the prices are going up on rentals, people are thinking they might as well go buy a home anyway,” Vallone said. “Because the prices are about in the same price range as far as getting a mortgage.”
According to Zillow, renters devote around 29.2 percent of their income to cover payments.