Mortgage Payments Are Rising Three Times Faster than Home Price

The median price paid for a home rose by just over 5% year over year in October 2018, according to CoreLogic’s Home Price Index, while the principal-and-interest mortgage payment on that same median-priced home rose by 17%, owing mainly to 2018’s interest rate hikes.
According to the CoreLogic Home Price Index Forecast, mortgage payments are expected to rise at a slower pace, close to 7%, this year. This is based on an anticipated 4.8% gain in home prices by October 2019, as well as an 0.2% gain in mortgage rates, based on an average of six forecasts.
The CoreLogic HPI Forecast suggests the median sale price will rise 2.5 percent in real, or inflation-adjusted, terms over the year ending October 2019 (or 4.8 percent in nominal, or not-inflation-adjusted, terms). Based on that projection, coupled with the aforementioned consensus mortgage rate forecast, the real typical monthly mortgage payment would rise from $918 in October 2018 to $963 by October 2019, a 4.9 percent year-over-year gain.
An IHS Markit forecast indicates that real disposable income will rise by just under 3 percent over the next year, meaning homebuyers would see a larger chunk of their incomes devoted to mortgage payments. 

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