Chat
Chat with Sales Hours: Monday-Friday 8:30 a.m. - 4:30 p.m. (CST)
Contact Sales
Call Sales Toll-Free 1-(866) 774-3282 Hours: Monday-Friday 7 a.m. - 5 p.m. (CST)
Product Login
Product Log-in
Product Support
Product Support
Email Sales
Contact Sales
After Hours
  • Support
  • Sign In Sign In
  • AUS NZ UK
CoreLogic - Home
  • Solutions
    view solutions by:

    Data Solutions

    • Lead Generation
    • Property Data
    • Location Intelligence

    Real Estate

    • Multiple Listing Enterprise
    • Agent & Broker

    Mortgage

    • Point of Sale
    • Origination
    • Servicing
    • Appraisal
    • Commercial Property Tax

    Insurance

    • Hazard Risk
    • Catastrophe Risk Management
    • Risk Evaluation
    • Underwriting Automation
    • Weather
    • Claims Automation
    • Restoration
    • INTRCONNECT

    Mortgage Lenders

    • Point of Sale
    • Origination

    Mortgage Servicers

    • Residential Property Tax
    • Default & Loss Mitigation
    • Portfolio Insight & Monitoring

    Mortgage Appraisers

    • Appraisal

    Real Estate Agents & Brokers

    • Agents & Brokers

    Real Estate MLS

    • Multiple Listing Enterprises

    Commercial Real Estate Owners

    • Commercial Property Tax

    Marketing Departments

    • Property Data

    Insurance Underwriters

    • Risk Evaluation
    • Underwriting Automation
    • Hazard Risk
    • Catastrophe Risk Management

    Insurance Risk Managers

    • Risk Evaluation
    • Hazard Risk
    • Catastrophe Risk Management

    Insurance Claims

    • Claims Automation
    • Restoration Contractors
    • Weather Verification

    Construction Contractors

    • Restoration Contractors

    General

    • Location Intelligence
    • Lead Generation
    • Data Solutions
  • Resources

    Reports

    • Climate Change
    • Construction Claims Bulletin
    • Construction Cost Update
    • Construction Insights
    • Home Price Insights
    • Homeowner Equity Insights
    • Loan Performance Insight
    • Mortgage Fraud
    • Property Tax Delinquency
    • Single-Family Rent Index

    Insight Blogs

    • Hazard HQ
    • Office of Chief Economist
    • Affordable Housing
    • Homebuying
    • Insurance
    • Other Articles

    More Resources

    • Events
    • Case Studies
    • White Papers
    • Podcasts
    • Quick Takes
  • Company
    • About
    • Leadership
    • Newsroom
    • Contact
    • Careers
  • Search
CoreLogic - Home
  • Solutions
  • Resources
  • Company

    • About
    • Leadership
    • Newsroom
    • Contact
    • Careers
  • Accounts

    • Products Sign-in
  • Contact

    • Sales Contact
    • Product Support
  • Regions

    • Australia
    • New Zealand
    • United Kingdom
  • Social

    • Facebook
    • Instagram
    • Linkedin
    • Twitter
    • Youtube
Solutions
VIEW BY:
  • Data Solutions

    • Lead Generation
    • Property Data
    • Location Intelligence
  • Real Estate

    • Multiple Listing Enterprise
    • Agent & Broker
  • Mortgage

    • Point of Sale
    • Origination
    • Servicing
    • Appraisal
    • Commercial Property Tax
  • Insurance

    • Hazard Risk
    • Catastrophe Risk Management
    • Risk Evaluation
    • Underwriting Automation
    • Weather
    • Claims Automation
    • Restoration
    • INTRCONNECT
  • Mortgage Lenders

    • Point of Sale
    • Origination
  • Mortgage Servicers

    • Residential Property Tax
    • Default & Loss Mitigation
    • Portfolio Insight & Monitoring
  • Mortgage Appraisers

    • Appraisal
  • Real Estate Agents & Brokers

    • Agents & Brokers
  • Real Estate MLS

    • Multiple Listing Enterprises
  • Commercial Real Estate Owners

    • Commercial Property Tax
  • Marketing Departments

    • Property Data
  • Insurance Underwriters

    • Risk Evaluation
    • Underwriting Automation
    • Hazard Risk
    • Catastrophe Risk Management
  • Insurance Risk Managers

    • Risk Evaluation
    • Hazard Risk
    • Catastrophe Risk Management
  • Insurance Claims

    • Claims Automation
    • Restoration Contractors
    • Weather Verification
  • Construction Contractors

    • Restoration Contractors
  • General

    • Location Intelligence
    • Lead Generation
    • Data Solutions
Resources
  • Reports

    • Climate Change
    • Construction Claims Bulletin
    • Construction Cost Update
    • Construction Insights
    • Home Price Insights
    • Homeowner Equity Insights
    • Loan Performance Insight
    • Mortgage Fraud
    • Property Tax Delinquency
    • Single-Family Rent Index
  • Insight Blogs

    • Hazard HQ
    • Office of Chief Economist
    • Affordable Housing
    • Homebuying
    • Insurance
    • Other Articles
  • More Resources

    • Events
    • Case Studies
    • White Papers
    • Podcasts
    • Quick Takes

Home / Intelligence / How Rising Mortgage Rates Eroded Housing Affordability in 2022

ABOUT THE AUTHOR
Data Team
Data Team
View Profile
  • December 21, 2022

How Rising Mortgage Rates Eroded Housing Affordability in 2022

Interest rates led to a nearly 60% jump in monthly payments, eating into housing affordability

Housing is expensive, and this year, homeowners saw housing affordability decline as their monthly mortgage payments jumped to the highest levels in 15 years. With inflation simultaneously pushing the cost of goods up everywhere, current economic conditions are exerting pressure on current and future homeowners leaving many wondering if they can afford a mortgage.

Over the last year, home prices increased by double digits, with CoreLogic’s most recent Home Price Insights report showing a 10.1% year-over-year increase in October 2022. And this rise in prices is independent of interest rates which spiked to over 7% in mid-November this year.

Mortgage Rates Hit Highs Not Seen Since the Beginning of the Millennium

The question of housing affordability is a common one. Even as the previously overheated market cools down, rates for 30-year fixed mortgages are still higher than they have been in the memories of most younger homeowners. The beginning of the year saw the 30-year fixed mortgage rate hovering at 3.22% for the week ending Jan. 6. From there, rates climbed up to rate hit 7.08% for the week ending Nov. 10, a figure that has not been recorded since 2002.

Since then, mortgage rates decreased a quarter of a point over four consecutive weeks to reach 6.33% for the week ending Dec. 8, the largest decline since 2008, according to Freddie Mac. Still, rates are over double what they were at this time last year (3.1%), prompting many homeowners to keep the affordable mortgage rates that they have already. Since higher interest rates erode overall purchase power by inflating a household’s monthly payments, many homeowners are choosing to stay put, which, coupled with the lack of new construction, has led to a tight housing supply and a decline in affordability.

“Increasing mortgage rates and high home prices have markedly eroded homebuyer affordability in 2022,” said Selma Hepp, interim lead of the Office of the Chief Economist at CoreLogic. “As a result of weakened buyer purchase power, and in light of rising costs across goods and services, consumer sentiment has fallen to an all-time low, and homebuyers have stepped out of the market. Unfortunately, affordability constraints are weighing more heavily on first-time homebuyers and buyers with limited down payments who were likely priced out of the burgeoning housing market during the last two years.”

How Dramatically Has Housing Affordability Declined?

Housing affordability has an inverse relationship with increasing list prices and mortgage rates. Assuming a household retains a median income, the home price they can afford has declined since December 2020. At the same time, the share of their income required to purchase a home increased.

In November 2019, the median home list price in the U.S. was $284,900 and the 30-year fixed mortgage rate was 3.7%. At this time, a median-income household could afford a home costing $487,540 and monthly payments would take 16.5% of their income, according to CoreLogic data. Fast forward to November 2022, and the median home price jumped to $370,000 with the 30-year fixed mortgage rate sitting at 6.8%. At these levels, a median-income household can afford a $392,511 home, a price tag that requires monthly payments that eat up 28.4% of their income.

The effects of these rising rates can be clearly seen in the increasing monthly payments required for the same home at different interest rates. The typical mortgage payment is the monthly payment a borrower would pay for a median-priced home at the going mortgage rate using a 20% down payment. The monthly payment includes principal and interest but does not include taxes and insurance.

Eroding Housing Affordability Limits Buyer Choices

Affordability varies from state to state. Although national home price increases in October 2022 were 10.5% year over year, the states with the highest year-over-year gains were Florida (20.2%), South Carolina (16.1%), Georgia and North Carolina (both 15.3%), according to CoreLogic’s Home Price Insights report. These unequal increases have led to more scrutiny from homebuyers – both individual and institutional – as to where they want to buy and when.

As the Federal Reserve continues to raise the federal fund rate, which reached 4.5% on Dec. 14, elevated inflation will continue to impact mortgage interest rates and housing affordability long term. While things are far from the 18.63% 30-year fixed mortgage rates seen in October 1981, current levels are at their highest in 15 years, per Freddie Mac historical data. However, current conditions do indicate that the cooling market may stabilize prices.

“The year 2023 offers some signs of optimism, as mortgage rates have taken a step back recently and could decline further in the new year since there are continued expectations of slowing home prices,” said Hepp.

To help make educated decisions about the next investment opportunity, many buyers are leaning on data to determine not only how much house they can afford but also the best markets for return on investment. In the current housing market, it is crucial to have portfolio monitoring that uncovers hidden risks and maximizes opportunities to implement streamlined solutions that ensure lenders can originate and close mortgages before the next rate change. To keep pace in an ever-changing market, give the gift of world-class data archives to help grow portfolios by helping clients make a home purchase into an investment that delivers more than just a roof over their heads.

  • Category: Blogs, Homebuying, Intelligence
  • Tags: Housing Market, Market Trends, Mortgage
ABOUT THE AUTHOR
Data Team
Data Team
View Profile

Related Posts

Wildfire Banner - Hazard HQ
Blogs

Wildfires in Canada Spreading, New Fires in Additional Provinces

Canada wildfires continue to burn across Alberta and new fires ignite in Nova Scotia, damaging homes near Halifax.

June 2, 2023
National flood insurance program coverage requirements
Blogs

Top Three Myths About Mandatory Purchase of Flood Insurance Coverage in Special Flood Hazard Areas Debunked

Just because national flood insurance program coverage is not required on a home, doesn’t mean a house should be uninsured.

June 2, 2023
Eye of the storm
Blogs

2023 Hurricane Risk Report

The 2023 Hurricane Risk Report provides insight into property risk, both nationally and by metro area, across single-family homes and multifamily homes from hurricane-driven wind and storm surge.

May 31, 2023

About Corelogic

  • Newsroom
  • Leadership
  • Careers
  • Ethics & Compliance

Accounts

  • Products Sign-in

Contact

  • Sales Contact
  • Product Support

Regions

  • CoreLogic Australia
  • CoreLogic New Zealand
  • CoreLogic UK

Follow & Connect

  • Facebook
  • Instagram
  • Linkedin
  • Twitter
  • YouTube
© 2023 CoreLogic. All rights reserved.
  • Legal
  • Privacy Policy
  • CCPA
  • Cookie Preferences
  • Security
  • Sitemap
  • Accessibility
  • Legal
  • Privacy Policy
  • CCPA
  • Cookie Preferences
  • Security
  • Sitemap
  • Accessibility