Typical Mortgage Payments - By City and Year

Typical mortgage payments fell over the 6 years after the housing bubble popped.

This chart from corelogic.com, shows "typical" mortgage payments over time for 5 metro areas. Payments are adjusted for inflation. I have marked with black vertical lines the peak of the housing bubble and the point where prices were the lowest, along with the average mortgage rates.

You can see that there was a significant decrease in payments over 6 years, because rates decreased while prices fell. For example, payments in New York fell from around $2,300 in 2006 to around $1,300 in 2012. And in Chicago, payment fell from about $1,300 to about $600, in the same time.

Typical mortgage payments rise for 4 years after the housing market bottomed.

But after 2012, for the next 4 years, payments gradually increased, while interest rates didn't change much. This was due to rising prices.

Will typical mortgage payments become more affordable in the future?

It doesn't seem likely that we will have as dramatic of a decrease in payments, if housing prices fall in the future. This is because unlike 2006, today mortgage rates have very little room to fall. Rates, as of Feb 2021 are 2.81%. Rates fell by 2.75% from the last peak to the last trough in prices. There is a lot less potential for rates to fall this time.

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