Mortgage interest rates on a 30-year, fixed-rate home loan are currently hovering around 4.3%, a very low rate by historic standards. Despite climbing prices and highly competitive housing markets, home buyers who purchase the median U.S. home at the end of 2017 can expect to only spend 15.7% of their income on a monthly mortgage payment. Historically, home buyers have spent an average of 21% of their typical income on mortgages. Interest rates would need to reach close to 7% for the monthly mortgage payments on the nation’s typical home to exceed that level.

However, in seven markets – Denver, Portland, Miami, and four of California’s largest markets – mortgage payments are already taking up more than 21% of the home buyer’s typical income. Zillow Research analyst Aaron Terrazas believes that mortgage rates are on an upward trajectory, as rates have risen almost 50 basis points at the start of the year.

If mortgage rates reach 5 percent by the end of this year… almost half (17) of the nation’s 35 largest markets will be less affordable than they were historically. If rates reach 6 percent – near the upper end of forecasters’ expectations – homes in 20 of the country’s 35 largest markets will be less affordable than historic norms.

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