Mortgage rates resumed their upward trek as inflation continues to run at 40-year highs. According to Freddie Mac, the 30-year fixed mortgage rate rose to 5.51% from 5.30% the previous week. With the potential of a more aggressive rate hike from the Federal Reserve at the end of the month, mortgage rates will likely rise even further. However, even with this increase mortgage rates will continue to be historically low – below 8% – in 2022.
Meanwhile, data shows that the typical family can barely afford to buy the median-priced home. In the previous year, families were earning about 50% more than the qualifying income. In contrast, families currently earn about 3% above the qualifying income. This translates to about $2,200 more than the qualifying income. Nevertheless, if buyers decide to use a down payment lower than 20%, then they cannot afford to buy the typical home. Their income is about 9% lower than the qualifying income.