Rates move lower following July 4th weekend

Rates continued their downward descent Tuesday evening as stocks, in particular the S&P 500 and DOW, also fell. The 30-year fixed rate mortgage dropped 6 basis points to 3.13% while the 15-year fixed rate mortgage dropped 7 basis points to 2.55%.

current outlook:

Housing seems more unaffordable than ever, especially when you see statistics like this from ATTOM Data Solutions: “home-price appreciation is outpacing annualized wage growth in 72 percent of the U.S. counties.” However, this assumes a couple things, including a 28% maximum suggested DTI (total cost of housing per month divided by monthly income). While a 28% DTI is considered “affordable,” lenders responsibly allow for DTIs up to 40%. This explains why average DTIs for first-time and repeat buyers in 2019 through Q1 2021 were 37% and 36% respectively. Furthermore, the average person can still buy a home in the majority of markets with less than 28% of their wages. Additionally, while inventory scarcity is the main culprit for rising home prices, this too is slowly improving. Currently, inventory is 17.3% above the low from April. Accordingly, housing price appreciation is expected to calm down by next year, hitting around 3.4% by May 2022. Though things could still be better, they are far from being dire. As such, housing remains an attainable and reasonable pursuit for many American families.