MReport April 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 47 SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T The Pace of Mortgage Payments Mortgage payments are outpacing home prices faster than ever, but that may soon change. M ortgage payments are significantly outpacing home values, according to a recent report from CoreLogic. CoreLogic indicates that while the median price paid for a home nationally had risen by just over five percent year-over-year as of October 2017, the principal-and- interest mortgage payment on that median-priced home had increased by 17 percent, mainly due to the 2018 rate hikes. CoreLogic notes that other forecasts have indicated a slower pace of mortgage payment rises in 2019, closer to seven percent, based on a 4.8 percent annual gain in home prices by October 2019 according to the CoreLogic Home Price Index Forecast, and a 0.2-percentage-point gain in mort- gage rates over that period, based on an average of six rate forecasts. Using the "typical mortgage payment" calculated using Freddie Mac's average rate on a 30-year fixed-rate mortgage with a 20 percent down payment, CoreLogic also measured afford- ability. According to the study, the national median sale price in October 2018—$218,733—was up 5.2 percent year-over-year, while the typical mortgage payment was up 17.0 percent because of a 0.9-per- centage-point rise in mortgage rates over that one-year period. CoreLogic predicts the median sale price will rise 2.5 percent in real, or inflation-adjusted, terms over the year ending October 2019, and 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, while another forecast indicates that real dispos- able income will rise by just un- der 3 percent over the next year, indicating homeowners will be paying more out of their income toward mortgage payments. When adjusted for inflation, mortgage payments are still trend- ing lower than the all-time peak. In October 2018, it remained 28.0 percent below the all-time peak of $1,275 in June 2006.

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