Mortgage Rates Increase Outpace Value

The rise in mortgage payments is eclipsing therise in property value. The typical mortgage payment in August 2018 was up15.4 percent, or $118 a month, from a year earlier, even though home values gained just 6.5 percent in that same period.

The combination has sparked concerns over a housing market slowdown. Since the Federal Reserve started to raise short-term interest rates in 2015, long-term interest rates – including mortgage rates – have remained surprising low. They had withstood the Fed rate hikes through 2018 without moving much until this fall.

If the labor market and inflation continue as expected, analysts predict the Fed will hike rates twice in the first half of 2019.

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