Higher mortgage rates and home prices mean that 20% of Americans spend roughly 30% of their paychecks on monthly home loan payments and 10% spend more than half of their pay, according to a recent NewHomesMates.com survey. The average 30-year fixed-rate mortgage has not dropped below 6.6% this year. However, homeowners faced even higher rates in 2023 as the market reacted to interest rate volatility.
Survey respondents said they have taken different steps to cope with the more expensive borrowing costs. While 32% of respondents said they were working more hours or had taken on a second job, 11% said they stopped saving for retirement and many Americans are cutting spending elsewhere: Affordability concerns have also driven some homebuyers to make more compromises when purchasing a home.
Spring buying will likely be tamed by still-too-high borrowing costs and limited housing inventory, two factors that have helped prop home prices up. However, improving for-sale options and the promise of an interest rate cut sometime in the summer mean relief is on the way. At its latest meeting, the Federal Reserve said it would continue to monitor inflation and other economic indicators to determine when to lower rates.
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