For many in North Texas, buying that first home isn’t easy. Not only is there a short supply, but there are also high prices. And now due to increasing mortgage rates, Texas buyers need even more money.
According to the Texas Real Estate Research Center at Texas A&M University, the rising mortgage interest rate is impacting who can purchase a home.
“As mortgage interest rates increase, the total monthly mortgage payment also increases,” said assistant research economist Dr. Clare Losey of TRERC in an official statement. “This increases the required income to qualify for a mortgage loan. In other words, as mortgage interest rates increase, purchasing power declines and households must earn more money to purchase the same-priced home.”
In early 2022, a 30-year fixed-rate mortgage was around 3%, but that number has jumped to 5.25%.
“In the first quarter, the required income to qualify for a mortgage loan at a rate of 3 percent amounted to $59,665 for the first-quartile Texas sales price of $229,000,” said Losey. But now, homebuyers need over $10,000 more in income to qualify.
According to Losey’s estimate, only 30% of Texas renters could afford the increase as opposed to the 38.9% of first-time buyers who could afford a home at a fixed-rate mortgage of 3%. If trends continue, even more buyers will be forced out of the market.
In case you missed it, check out Local Profile‘s article on finding the perfect house rental.