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Americans typically spend about 24% of their income on mortgage payments

The average mortgage payment is just over $2,000. (iStock)

Mortgage payments are up from a year ago, but still below the threshold that many mortgage experts recommend homeowners adhere to.

Often recommended by homeowners Don’t spend more than 30% of your income Regarding housing costs, the average monthly mortgage payment for a single-family home currently requires 24.2% of a buyer’s income, and in the three months ending in March Realtor.com reports:That’s down slightly from the previous quarter, but up more than 23% from last year.

According to the National Association of Realtors, the average monthly payment for an American taking out a mortgage with a 20% down payment was $2,037. The report statedThis means payments are up about $173 from last year.

“We know that families are spending more to buy a home in the current market compared to a year ago and historically typical home prices,” said Daniel Hale, chief economist at Realtor.com. “Home prices and mortgage rates are both rising, forcing families to choose between not buying a home, buying and lowering their requirements, or buying and putting more of their paycheck toward the purchase.”

First-time homebuyers often put less than 20% down, have higher monthly payments, and tend to spend more of their income on their mortgage: Realtor.com reports that these buyers spend 36.5% of their household income on mortgage payments.

Home prices have skyrocketed in most major cities, putting many buyers out of reach. In about 68% of the 50 largest U.S. metropolitan areas, you’d need to earn at least $100,000 to buy a median-priced home, according to Realtor.com. April Housing Report Said.

“Remarkably, more than 90 percent of the nation’s metropolitan areas experienced home price growth even as they faced the highest mortgage interest rates in the past 20 years,” said Lawrence Yun, NAR’s chief economist.

“In the current market, rising home prices are a direct result of housing supply not fully meeting demand,” Yoon further explained.

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Home prices hit record high

Mortgage payments are rising for many reasons, including historically high home prices, which are driving sellers to list homes for more than they’re worth, a practice that became widespread during the pandemic housing boom.

The median home price is now $434,000, up 6% from a year ago. According to RedfinFewer homes on the market have made buyers eager to buy, sending prices soaring: While the number of homes on the market is still about 20% lower than before the pandemic, it increased 1.7% in April.

“It’s not all bad news for homebuyers. Mortgage rates are already inching lower following this week’s inflation report, which suggests the Fed may cut rates this summer – something many thought was unlikely a few weeks ago,” said Chen Chao, economic research leader at Redfin.

Homes may start off the market at a high price, but in certain parts of the country, sellers are struggling to sell and are being forced to lower their prices: 17.6% of homes on the market were reduced in price in April, according to Redfin research.

“In some parts of the country, homes have been on the market for a long time, giving buyers more room to negotiate and allowing sellers to drastically reduce their asking prices or make concessions,” Zhao explained.

But popular markets aren’t seeing the same impact. In San Jose, three in four homes sold in April sold for more than their original asking price. In Rochester, New York, 72.8% of homes sold for more than their original asking price.

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Currently, 550 cities in the United States have an average home price of over $1 million.

Mortgage delinquencies on the rise

Rising home prices, inflation and interest rates have led to an increase in mortgage delinquencies. According to the Mortgage Bankers Association, the mortgage delinquency rate rose to 3.94% at the end of the first quarter. National Delinquency Survey.

The delinquency rate includes mortgages that are late on at least one payment but does not include mortgages that are in foreclosure. Delinquency rates are currently up 6 basis points from the fourth quarter of 2023 and a staggering 38 basis point increase compared to last year.

“Mortgage delinquency rates rose slightly overall in the first quarter of 2024, but not across all three major loan types. Delinquency rates for FHA loans fell, conventional loans remained roughly flat and VA loans rose,” explained Marina Walsh, CMB’s vice president of industry analysis.

“Notably, delinquencies increased across all three loan types compared to a year ago. Rising unemployment, declining personal savings, rising property taxes and insurance costs, and rising credit card debt and delinquencies are all contributing to some homeowners finding it more difficult to make their mortgage payments,” Walsh said.

Prospective homebuyers who want to see what loan terms and interest rates are right for them can use Credible’s free online tool.

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