DC Homeowners Spend 32 Percent of Income on Mortgages
A new study by Zillow shows that homeowners in the DC area spent 17.8 percent of their income on their mortgages in the fourth quarter of 2017. Historically (from 1985 to 2000), that percentage was notably higher at 22.3 percent, but rising interest rates could be moving the region back to percentages that high.
Zillow's analysis predicts that once mortgage rates hit 5 percent, homebuyers will spend 20.2 percent of their income on their monthly mortgage. If rates were to rise as high as 7 percent, homebuyers will be spending 25.1 percent of their income on mortgages — nearly as much as area renters currently spend on housing (25.9 percent).
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In DC proper, homeowners are already spending a significant chunk of their income on home payments, jumping from 29.9 percent in 2015 to 32.5 percent at the end of last year.
The study assumes that homeowners earn the area median income and own a median-priced house with a 20 percent down-payment on a 30-year, fixed-rate mortgage.
See other articles related to: affordability, mortgage rates, mortgages, zillow
This article originally published at https://dc.urbanturf.com/articles/blog/rising-mortgage-rates-threaten-to-make-owning-as-expensive-as-renting/13696.
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