Un-affordability is on the Upswing

The Wall Street Journal (subscription only) says that an important shift in house affordability occurred from the fourth quarter of 2004 to the first quarter of 2005. For the first time since 2002, the average initial mortgage payment increased quarter to quarter instead of decreasing.

Snip…

“Some of the most powerful fuel helping to sustain the five-year housing boom has been the onslaught of creative mortgage products -- from interest-only loans to adjustable-rate mortgages carrying starter rates as low as 1% -- that have allowed buyers to keep initial payments down even as home prices have soared. As a result, the average initial monthly mortgage payment largely has declined since 2002, according to an analysis by Bear Stearns Cos.

But in a significant shift, those numbers reversed direction in the first quarter of this year. The average initial mortgage payment for home buyers climbed to $2,338 in the first quarter from $2,060 in the fourth quarter of 2004, according to the investment bank. The Bear Stearns analysis looked at jumbo mortgages, which are loans above $359,650.”