One of the benefits of buying a home is that mortgage payments can be cheaper than renting. If you can save enough money to cover the down payment and other homeowner’s expenses.
However, according to a recent survey by real estate agent Redfin, US rents soared last year, but as home prices continue to rise, mortgage payments have increased over the last few months, resulting in higher rents. Is above.
In this study, we considered two indicators to measure price increases. Median monthly rent for all US apartment types and median monthly mortgage payments for new homebuyers with a down payment of at least 5%. Mortgages have increased by 31%, while rents have increased by 15% year-on-year since February last year.
Mortgage payment growth has been accelerating since the beginning of 2022, according to Redfin data.
However, rising mortgage costs do not mean that the number of buyers will decrease immediately. “We haven’t seen a slowdown in the housing market yet, and people are rushing to buy homes before mortgage rates rise further, which could be a bit late,” said Darryl Fairweather, chief economist at Redfin. I am.
However, that can change quickly. According to Bankrate, the average 30-year fixed mortgage rate was 4.53% as of Thursday, 0.06% higher than last Friday. Prices have been close to 4% or more since February last year, the highest since May 2019.
CNBC’s Diana Orrick reported that some economists have lowered their sales forecasts for the rest of the year in response to rising interest rates. According to Redfin’s latest forecasts, home price increases are expected to slow to 7% annually by the end of 2022 after double-digit price increases last year.
“As mortgage rates continue to rise, more first-time homebuyers choose to continue renting instead of buying, which drives more demand for the rent market and rent growth. We expect to keep it, “says Fairweather.
After all, both renters and new homeowners are paying more for their place of residence than before. This is mainly because housing supply, which was already low before the pandemic, cannot keep up with demand.
“We aren’t really doing anything to deal with the hole we’re in in terms of building a new house. It takes a long time to get out of that hole,” says Fairweather.
In the future, Fairweather predicts that “buyers will decide more terms by the end of the year” as the overheated market for inspection exemptions and full cash offerings cools.
“It will be more expensive than earlier this year, but at least it may be less stressful when it comes to making offers at home,” she says.
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