Higher home prices are overshadowing potential savings from historically low mortgage rates, according to a new analysis by CoreLogic, a real estate research firm.<\/p>\n\n\n\n
\u201c[The] 2020\u20132021 pandemic housing market recorded the fastest annual home price appreciation in the 45-year history of the index,\u201d Yanling Mayer, principal economist for CoreLogic, writes in a March 18 analysis on the company\u2019s website.<\/p>\n\n\n\n
Record-low mortgage rates are often cited as helping to boost affordability in the current market. But how much have low rates helped?<\/p>\n\n\n\n
Buyers who financed their purchases using FHA loans, which tend to skew toward first-timers, have seen a rapid rise in typical monthly payments, despite record-low interest rates, Mayer writes. During the second half of 2021, the typical monthly out-of-pocket cost for those using FHA financing was $1,710\u2014up by 19.7% from the rates just before the beginning of the pandemic, CoreLogic reports.<\/p>\n\n\n\n
Monthly payments on homes purchased with VA loans posted a double-digit increase as well, jumping 11.3% from pre-pandemic levels, the analysis reports.<\/p>\n\n\n\n
However, buyers who have financed their purchases using conventional loans have locked in more savings from lower interest rates. They\u2019ve seen monthly payments rise by 3.3%, or $57 per month, in comparison.<\/p>\n\n\n\n
\u201cMany of these home buyers are likely\u00a0repeat or trade-up buyers who were able to afford a large down payment to obtain a more favorable interest rate,\u201d Mayer writes. \u201cFirst-time home buyers often use FHA loans for financing lower-priced starter homes, and the surge in starter home prices has inadvertently eroded affordability and contributed to pricing out families who hope to become first-time homeowners.\u201d<\/p>\n\n\n\n
\u00a9National Association of REALTORS\u00ae
Reprinted with permission<\/p>\n","protected":false},"excerpt":{"rendered":"
Higher home prices are overshadowing potential savings from historically low mortgage rates, according to a new analysis by CoreLogic, a real estate research firm. \u201c[The] 2020\u20132021 pandemic housing market recorded the fastest annual home price appreciation in the 45-year history of the index,\u201d Yanling Mayer, principal economist for CoreLogic, writes in a March 18 analysis on … <\/p>\n