New Mortgage Payments Have Risen $514 in Just 5 Months

That’s how much more a typical monthly mortgage payment cost for new homebuyers in May than at the beginning of the year—but things have stopped worsening so quickly, according to a new report.

The median monthly payment on an application for a new 30-year fixed-rate mortgage rose to $1,897 in May, up from $1,383 at the beginning of the year, the Mortgage Bankers Association (MBA) said Thursday. The good news for would-be homebuyers is that this was only $8 more than in April, marking a distinct slowdown in how much worse affordability is getting.

The cost to buy a house has ballooned because of rapidly rising prices and spiking mortgage rates, the latter a result of the Federal Reserve’s anti-inflation interest rate hikes. That’s priced many homebuyers out of the market. In April 2022, a family would have needed an annual income of $107,600 to afford the median mortgage payment on a newly-purchased home, up from $79,600 in April 2021, the Joint Center for Housing Studies of Harvard University estimated in a report this week. That’s put homebuying out of reach for some 4 million renters.

With fewer people able to afford to buy homes, sales have slowed. According to some measures, prices have continued to rise at a rapid pace, but MBA’s data, which is based on real mortgage applications, has shown a significant deceleration in monthly mortgage payment increases. Economists at MBA predict the housing market will continue to cool down under pressure from rising mortgage rates.

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