What Rates Could Do to Affordability

Mortgagemarkher's Blog

Here is a great article on rates and what is expected for the year ahead.

Remember the 10 year term is at the all time low of 3.69% right now!

What Rates Could Do to Affordability

When it comes to home values, mortgage payment affordability acts like a giant lever.

A meaningful rise in mortgage payments (relative to income), would bear down on home prices, and vice versa.

Given this relationship and today’s towering home values, mortgage affordability is centre stage. That has inspired a stream of articles about whether swarms of people will default when rates “normalize.”

But how worrisome is that threat really? For insights, we turned to BMO Capital Markets Senior Economist Sal Guatieri.

To preface everything, here are some data points to consider…

…On Affordability

• According to BMO, home ownership is “affordable” (for the median buyer) when mortgage carrying costs—monthly payments, property taxes, heat, etc.—don’t exceed…

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