LEE COUNTY, Fla. — As mortgage rates fluctuate each week, with a 30-year fixed-rate mortgage still more than double the interest rate of November 2021, this is also having a clear impact for borrowers on the infamous question of “how much home can I afford?”
With North Port and Cape Coral as two of the five metro areas that require the steepest income increase from year-to-year for a borrower to afford what Redfin calls a house with a “media sale price” for October 2022.
Redfin’s survey finds that borrowers in North Port would need a 73.9 percent “year-over-year change in income” to reach the $488,824 median sale price. That increase of income from $75,659 to $131,535 is the steepest in the nation.
The survey reveals that Cape Coral is fifth in the nation, with a 60.6% income increase for a median sale price of $390,000. Borrowers would need an income of $104,943 for October 2022 in Cape Coral, up from $65,338 the previous October. Nationally, the survey found an increase of 45.6 percent in year-over-year income increases to secure a mortgage.
Last week, the average interest rate for a 30-year fixed-rate mortgage dropped from 7.1 percent to 6.6 percent, the steepest weekly drop since 1981. However, that 6.6 percent interest rate is still more than double the 3.1 percent average rate in November 2021.
Redfin also reports the impact of much higher interest rates and much higher home prices. In North Port, the company reports the monthly mortgage payment, only principal and interest, would increase from $1,891 to $3,288. For Cape Coral, that would be an increase from $1,633 to $2,624. These figures also do not include property taxes or insurance, a key component of housing costs in Florida.
Outside of Southwest Florida, Miami was second, in the nation, and Tampa was fourth in measuring the increase of salary necessary for a borrower to secure a loan for a median-priced house from October 2022.
Here are the assumptions in Redfin’s survey: that a borrower spends no more than 30 percent of income on housing, assuming a 5 percent down payment and work with an October 2022 average of 6.9 percent for the mortgage rate.