房奴卷土重来：可预见未来的新常态

While many first-time home buyers struggle to afford a down payment on a house in today’s market, one of the long-term affordability issues centers on monthly payments resulting from escalating mortgage rates. The current 30-year fixed-rate mortgage is 7.18%, according to Freddie Mac, a stark difference from the sub-3% rates seen during the early days of the pandemic.

The surging mortgage rate results in higher monthly payments for new buyers. Indeed, monthly payments are up 60% (or $871) year-over-year, according to real estate data and analytics firm Black Knight. The average monthly principal and interest payment for borrowers on a 30-year fixed rate loan in July 2023 was more than $2,300, which is the highest average principal and interest payment on record, according to Black Knight.

Now, more than half of homebuyers face a monthly mortgage payment of at least $2,000, while one-fourth are paying $3,000 or more, Black Knight data shows. Meanwhile, average U.S. monthly earnings in July 2023 were just $4,600, according to economic data firm CEIC. That means some home owners could be spending more than 60% of their paychecks on their mortgage.

Keep in mind that principal and interest figure is before factoring in expenses like property taxes and insurance.

“When did the $2,000 monthly mortgage payment become the norm?” questions Andy Walden, Black Knight vice president of enterprise research in the report. “Nearly one in four July homebuyers has payments north of $3,000, up from just 5% in 2021. We’ve been talking about affordability for quite some time now, but this puts the situation in stark relief.”

Based on current mortgage rates, average income levels, and home prices, most first-time home buyers using a “minimal” down payment could be paying more than 40% of their monthly income toward housing, says Buck Horne, director of equity research, homebuilding and residential REITS at Fortune 500 investment banking firm Raymond James.

“All else equal, that number certainly looks unsustainable relative to long-term averages closer to 30%,” Horne tells Fortune.

Higher monthly payments can be particularly challenging for first-time home buyers. The median renter’s monthly household income is $3,900, Mark Fleming, chief economist at Fortune 500 financial services company First American, tells Fortune. That implies that a $2,000 principal and interest payment would represent 51% of the prospective homebuyer’s monthly budget, he adds.

“That’s generally considered a high burden, and one reason why, in our estimation, affordability is at a 30-year low,” Fleming says. “The combination of higher rates and continued price appreciation has made affordability a real challenge for first-time homebuyers.”

Ultimately, some of the factors keeping buyers—not necessarily new homeowners—in the market include families providing financial support for a down payment and buyers using “significant” home equity from existing home sales to offset a mortgage on a new house, Horne says.

With housing affordability largely being challenged by mortgage rate increases by the Fed, it’s nearly impossible to predict when prospective homeowners could get some relief.

“Until the Fed is clearly done raising interest rates, there will be upward pressure on the mortgage rate,” Fleming says. “But given the historically fast and assertive pivot to tighter monetary policy we have just experienced, it’s likely that the majority of the adjustment in mortgage rates has already occurred.”

Overall, rising mortgage rates—coupled with tight housing inventory and pent-up demand—are likely to squeeze new buyers for a while.

“Any relief in mortgage rates is likely to get absorbed by even higher home prices,” Horne adds. “So until something more fundamental breaks within the larger economy and disrupts household balance sheets, the current level of mortgage payments might be the new normal for the foreseeable future.”