Affordability Crisis: High Rates and Home Prices Squeeze Buyers’ Budgets, Impacting Monthly Payments and Purchasing Power.

Written by Adam Dellamonico of Movement Mortgage – 

Affordability is the biggest issue that home buyers are currently facing in this market, with inflated rates paired with all time high home prices putting a real strain on monthly payments for buyers. A seemingly small increase or decrease in rates can make a massive difference not just on the monthly payment front, but also in overall purchasing power. This is crucial to keep an eye on moving forward.

Here is a look at what a .5% rate increase can do to these two metrics on a $500,000 loan:

Rate Increase Impact

6.500% to 7.000%:

Payment Difference = $3,160 -> $3,325 | $165/mo.

Purchasing Power Impact = -$25,000

7.000% to 7.500%:

Payment Difference = $3,325 -> $3,500 | $175/mo.

Purchasing Power Decrease = -$28,000

7.500% to 8.000%:

Payment Difference = $3,500 -> $3,680 | $180/mo.

Purchasing Power Decrease = -$30,000

I emphasize this not only to highlight the large impact caused by a seemingly small change in the market, but to also serve as a reminder for why its so important to for buyers to check in with their lender on a monthly basis at the very least. 

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Anastasia Kaufman, GRI,ABR,SFR,CDPE,SRS

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