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Even with low interest rates, mortgages are becoming unaffordable


The median American family is finding that mortgage payments, even with low interest rates, are increasingly out of reach. According to the aforementioned study, report from the Federal Reserve Bank of Atlanta

The Atlanta Fed stated that a median-income household should spend 32.6% of their annual income to buy a house at the median price. In June 2021, the average home price rose to $340,000. This 23.8% rise was recorded from June 2020. 

It is an indicator of major affordability issues: Families who spend over 30% of their monthly earnings on housing are considered to be “cost-burdened.” according to the Department of Housing and Urban DevelopmentThey can. Because so much of their income goes toward housing, they may struggle to afford adequate food and medical care.

Atlanta Fed reported that the low mortgage rates during the coronavirus pandemic was a catalyst for greater housing demand. Even though prices grew due to demandLow interest rates and a combination of modest income growthThe keeper monthly mortgage payments affordableThe Atlanta Fed predicts that 2020 will see many new buyers.

This dynamic is expected to change in 2021. According to Atlanta Fed data, the fixed 30-year mortgage rate was at an all-time low of 2.877% in August. However, this is not enough to offset the higher prices. There is an affordability barrier for buyers.

This is a particularly serious issue for first-time homebuyersThese buyers typically have less capital that other buyers. Zillow also found out that they now need to spend a minimum of $2,000 per month. year longer to save for a 20% down payment than it did just five years ago.

Unaffordability of mortgages is only one aspect of America’s housing crisis. Rent is also becoming less and less affordableFor many families all across the country.

There are less accessible markets all across the country.