Despite a recent softening in the US housing market, a combination of rising borrowing costs and still-high prices have put prospective first-time homebuyers in a serious bind.
For the first time since records began, first-time homebuyers made up the smallest share of sales last year at 26%. And as we noted on Thursday, a surge in mortgage rates above 7% have sent homebuyer applications to a 28-year-low across all age groups.
Now, as the spring homebuying season approaches, tight inventory and uncomfortably high interest rates mean that the American dream can only be achieved by those with high-paying jobs, lots of money, or rich parents, Bloomberg reports.
Also submitted for your consideration – 99% of outstanding mortgages have interest rates below the Primary Mortgage Market Survey. People bought and refinanced when rates were low, while new applications have essentially crashed as illustrated above. (Graph at link)
Thanks to higher interest rates, a buyer purchasing a $400,000 home with 20% down on a 30-year fixed loan, the monthly payment, including principal and interest, is now roughly $230 a month more than it would have been a month ago. Compared with a year ago, when rates were in the 4% range, today’s monthly payment is about 50% higher, according to CNBC’s Diana Olick.
Good luck out there…
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