What Rising Interest Rates Mean for the Housing Market

Low inventories of homes, especially those at the lower end of the price range, should keep rising mortgage rates from pulling down sales growth much. But home price gains are likely to slow, especially for homes at the higher end of the price range and ones in large metro areas of the West where price growth had been high for a while.

Thirty-year fixed mortgage rates have risen by about half a percentage point since the election. For a new $250,000 loan with a 20% down payment, the principal and interest payment has risen by $55 per month. The annual income a borrower needs to qualify for that loan is now $44,000, up from $42,000 earlier. Qualifying income for those who make a down payment of 5% has risen from $50,000 to $53,000. For a $350,000 loan with 20% down, the increase in the monthly nut will be $80, with qualifying income at $65,000, versus $62,000 earlier.

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