According to the latest housing market update from the S&P Global Ratings, rising interest rates could cause mortgage payments to increase up to +8.4% in 2019.

The implications for rising interest rates include:

  • exacerbated challenges to the already problematic affordability issues that homebuyers have been facing for several years
  • the mortgage payment growth rate over this past year has exceeded home price appreciation
  • a forecast that median home sale prices will increase +1.9% by August 2019
  • a forecast that this trend in rising interest rates will continue through 2019, though perhaps at a slower rate due to the Federal Reserve’s most recent announcement.

The S& P Global Ratings report also indicated that rental prices are set to increase by approximately 0.57% this month, according to the National Apartment Report – US Rent Trends released by ABODO a national apartment search site. https://www.abodo.com/blog/december-2018-national-apartment-report/

In some areas, rent increases are and will be much higher. For example, again according to ABODO:

  • Jacksonville FL – +12.6%
  • Nashville TN – +10.4%
  • Savannah GA – +9.5%
  • Boulder CO – +7.3%
  • Paul MN – +6.5%
  • Petersburg FL and Long Beach CA – +5.6%

And some areas are and will see rent decreases:

  • Columbus OH – -9.2%
  • Rochester NY – -9%
  • Bakersfield CA – -5.7%
  • Athens GA – -5.4%

ABODO believes that the last interest rate increase may be the last increase for the winter due to a weaker stock market and low gas prices.

“The weaker stock market…may temporarily halt the Fed’s string of interest rate increases. With a possibility of a weaker economy, less threat of inflation and stable interest rates, we’re just not feeling much rent (price) movement into the winter months. We’ll also see if what seems like an early winter will put a damper on January rents.”