Soaring home prices forcing buyers to dig even deeper
Increasing number of borrowers are spending 45% of their paycheck on repayments
Homebuyers already strained financially are being forced to dig deeper into their hip-pockets, with an increasing number of borrowers forking out almost half of their paycheck to cover mortgage payments.
New data shows that around one in five conventional mortgages granted to American homebuyers over the past winter went to borrowers who spent 45 percent of their incomes on payments, the Wall Street Journal reported. This figure has tripled since 2016 and the first half of 2017, according to data by CoreLogic.
The current climate is a result of a hike in home prices compared to incomes and a historic undersupply of homes, the Journal reported.
Using 30-year mortgage financing data provided by Freddie Mac and Fannie Mae, CoreLogic found that 73 percent more of these loans were issued in the second half of 2017 than the first.
The finding comes amid record high mortgage rates, which rose to 4.46 percent for 30-year fixed-rate mortgages in March, the highest in four years, and as of last week sat at 4 percent [WSJ] – David Jeans