ICE Mortgage Monitor

Trading Up to a 25% More Expensive Home Would More Than Double the Average Mortgage Holder’s Payment - Seite 2

“After closing out 2023 at an 11-year low, home sales have begun to improve over the last two months,” Walden added. “In fact, lower interest rates in late Q4 and early Q1 led to February home sales hitting their highest adjusted level since March 2023. With sales rising, and inventory still tight, months of supply edged slightly lower in February, continuing to provide a floor for home prices. Our February ICE Home Price Index showed strength in that regard, with adjusted home prices rising by +0.43%, up from +0.33% in January, which is equivalent to a +5.3% seasonally adjusted annualized rate. Keep in mind that SAAR had fallen below 1% as recently as five months ago.”

The lock-in effect on inventory varies significantly across geographies, with the cost to give up an existing mortgage and buy a 25% more expensive home ranging from a low of a 72% payment increase in Buffalo, N.Y., to more than 140% in Los Angeles and San Jose, Calif. While home prices and mortgage amounts are certainly a factor in that increased cost, the effect is compounded by the fact that borrowers in more expensive cities tend to have both lower mortgage rates and higher unpaid balances on their existing homes. Because of this, the lock-in effect on inventories may be strongest in more expensive California markets such as Los Angeles, San Diego, San Francisco and San Jose – markets that also face challenges in terms of new construction.

“Mortgage rates need to come down to dislodge the lock-in effect,” Walden concluded. “Since most factors influencing 30-year rates are out of lenders’ control, they need to be able to find ways to compress spreads without simultaneously compressing their own profit margins. That’s key to our mission at ICE – identifying and eliminating inefficiencies in housing finance through technology, while finding smarter, faster, cheaper and more transparent ways to originate loans and increase liquidity."

Much more information on these and other topics can be found in this month’s Mortgage Monitor.

About Mortgage Monitor

ICE manages the nation’s leading repository of loan-level residential mortgage data and performance information covering the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The combined insight of the ICE Home Price Index and Collateral Analytics’ home price and real estate data provides one of the most complete, accurate and timely measures of home prices available, covering 95% of U.S. residential properties down to the ZIP-code level. In addition, the company maintains one of the most robust public property records databases available, covering 99.9% of the U.S. population and households from more than 3,100 counties.