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Housing Affordability Best in Four Years, Purchase Rate Locks Surge
Monday, August 3, 2020
The last report from Freddie Mac put
its 30-year fixed rate mortgage (FRM) at 2.99 percent, up 1 basis point from the
all-time low. Black Knight, in its new Mortgage Monitor, says that has made
home affordability the best in four years. As of mid-July, it required only
19.8 percent of the nation's median monthly income to make the mortgage payment
on an average priced home using that 30-year FRM and a 20 percent down payment.
That is more than 5 percent below the average over the 1995-2003 period. The
required monthly payment, $1,071, is 6 percent less than last July despite an average
$12,000 increase in home prices over that same period. After 97 consecutive months, these
record-low mortgage rate have made homeownership the most affordable it has
been since 2016, and, while many areas, especially those along the coasts,
remain out of reach for many low and middle-income earners, each of the 25 markets
are seeing their strongest affordability in more than 2 years. Black Knight
says, within the 100 largest markets several, including Virginia Beach,
Hartford, and Scranton, have the strongest affordability levels in a decade and
a half and six states, Louisiana, Arkansas, Iowa, West Virginia, Kentucky and
Maryland, payment-to-income ratios are the lowest in more than 25 years.
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