Volatile mortgage rates are changing what some potential home buyers can afford from week to week, requiring a smarter way to shop
- Zillow's new app filter allows shoppers to search for homes by a range of all-in monthly mortgage costs instead of list prices.
- Updated mortgage rates feed into the filter, meaning search results will stay within a shopper's budget, regardless of how rates or prices move.
- Monthly mortgage costs rose by $431 over the past year, often swinging by more than $100 per month.
SEATTLE, April 10, 2023 /PRNewswire/ -- Zillow® has a new way to shop that helps buyers navigate a rapidly changing market and find homes that fit their monthly budget. The new filter shows homes within a range of all-in monthly costs, instead of list prices. This monthly cost includes principal and interest, as well as estimates for insurance costs, taxes and HOA fees, clarifying a chief source of confusion for buyers.
Shoppers can use the monthly payment filter now on the Zillow app.
Last year's drastic rise in mortgage rates sent monthly costs for home buyers skyrocketing — nearly $700 more than the year before in recent months — and are now $431 higher than in March 20221. High rates combined with record-breaking home appreciation have nearly doubled monthly mortgage costs since 2020.
Rates are also extraordinarily volatile. Home prices nationwide started falling in June and flatlined this year, but shifting mortgage rates often swung costs by more than $100 month to month.
"Shoppers looking at list prices struggle to figure out what they can really afford, because the mortgage rate is what makes or breaks a monthly payment. Adding in costs like taxes, insurance and HOA fees can quickly bust a shopper's budget," said Amanda Pendleton, consumer finance expert at Zillow Home Loans. "This new search tool does the math, so shoppers can confidently jump into finding a home they love and can afford."
Shoppers can start with Zillow's linked affordability calculator, entering their down payment amount, income and debts to estimate the monthly mortgage cost they can afford. Then they enter their monthly budget range into the filter to start shopping. Updated mortgage rates feed into the filter, showing homes and hiding others to keep shoppers on budget as rates and price cuts change the monthly payment math.
A new survey from Zillow Home Loans finds that the most difficult financing activity among prospective home buyers is understanding all costs associated with a mortgage payment, followed by figuring out how much home they can afford, and researching mortgages and rates.
"Fast-rising mortgage rates last year pushed monthly costs up with unprecedented speed, dragging affordability to its lowest point in more than 20 years," said Orphe Divounguy, senior macroeconomist at Zillow Home Loans. "Beyond the high costs, volatile mortgage rates have made it extremely difficult to plan and budget to buy a house."
The new filter — coming soon to Zillow.com — is the latest Zillow technology helping buyers navigate a challenging affordability landscape. Down payment assistancethat's built into listings — letting shoppers see what's available for them where they are looking — as well as mortgage and affordability calculators, can all help buyers make sense of the fast-moving market.
Although typical home values peaked in June before tapering off, mortgage rates that reached 20-year highs later in the year caused monthly mortgage payments to peak in October, Zillow data shows.
1 The monthly mortgage cost for a home priced at the Zillow Home Value Index for the United States, with a 5% down payment, at the average mortgage rate for that month and not including insurance and taxes.
AboutZillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting, or financing with transparency and ease.
Zillow Group's affiliates and subsidiaries include Zillow®; Zillow Premier Agent®; Zillow Home Loans™; Zillow Closing Services™; Trulia®; Out East®; StreetEasy®; HotPads®; and ShowingTime+™, which houses ShowingTime®, Bridge Interactive®, and dotloop®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).
(ZFIN)
SOURCE Zillow
As an expert in real estate finance and market dynamics, I've closely followed the evolving landscape of mortgage rates and their impact on homebuyers. My expertise is demonstrated by an in-depth understanding of the intricate factors influencing housing affordability, a proficiency that extends to the innovative solutions introduced by industry leaders like Zillow.
In the article, Zillow is addressing the challenges posed by volatile mortgage rates, a significant concern for potential homebuyers. The key points and concepts covered in the article include:
-
Volatile Mortgage Rates: The article highlights the unpredictability of mortgage rates, emphasizing that they are subject to frequent changes. This volatility is a crucial factor affecting the affordability of homes and creates challenges for buyers in planning their budgets.
-
All-In Monthly Mortgage Costs: Zillow's new app filter introduces a more practical approach for homebuyers by allowing them to search for homes based on a range of all-in monthly mortgage costs rather than just list prices. This approach considers principal and interest, along with estimates for insurance costs, taxes, and HOA fees, providing a clearer picture of the total monthly financial commitment.
-
Impact of Mortgage Rate Changes: Monthly mortgage costs have experienced a significant increase over the past year, rising by $431. The article notes that these costs can fluctuate by more than $100 per month due to changing mortgage rates, emphasizing the need for a tool that helps buyers navigate these fluctuations.
-
Affordability Challenges: The article touches on the challenges faced by buyers when understanding the true affordability of homes. It emphasizes that mortgage rates play a pivotal role in determining monthly payments and that additional costs like taxes, insurance, and HOA fees can impact a buyer's budget.
-
Zillow's Solution: Zillow's new search tool addresses the affordability challenge by incorporating updated mortgage rates into the filter. This ensures that search results align with a buyer's budget, regardless of how rates or prices may change. The tool is designed to assist shoppers in confidently finding homes they love and can afford.
-
Zillow's Technology: The article mentions other technologies offered by Zillow, such as down payment assistance built into listings, mortgage and affordability calculators, and an upcoming filter on Zillow.com. These tools collectively aim to help buyers make informed decisions in a fast-moving market.
-
Survey Findings: Zillow Home Loans conducted a survey revealing that prospective home buyers find understanding all costs associated with a mortgage payment to be the most challenging financing activity. This is followed by determining how much home they can afford and researching mortgages and rates.
-
Market Analysis: Zillow data shows that although typical home values peaked in June, mortgage rates reached 20-year highs later in the year, causing monthly mortgage payments to peak in October.
By integrating these concepts, Zillow is providing a comprehensive solution to the dynamic challenges faced by homebuyers in the current real estate market. This aligns with their commitment to reimagining real estate and making the process more transparent and accessible for customers.
