How Home Affordability Will Suffer as Interest Rates Rise: County-Level Heat Map

With the Federal Reserve announcement today that it will be raising short-term interest rates by a quarter point — the first time it has done so since June 2006 — RealtyTrac took a look at the potential impact of rising interest rates on home affordability.

We analyzed projected affordability in 582 counties nationwide in the first quarter of 2016 based on five different scenarios for 30-year fixed mortgage rates: if those  rates stay about the same as where they have been in recent months at around 3.77 percent; and if they rise to 4.00 percent, 4.25 percent, 4.50 percent and 5.00 percent. In each scenario we assumed home prices and wages would continue to rise in the first quarter at the same pace they have been rising in 2015.

As the interactive heat map below demonstrates, only 20 of the 582 counties (3 percent) are unaffordable by their own historical affordability standards if mortgage rates remain about where they are. The number of unaffordable counties rises to 76 counties  (13 percent) if mortgage rates rise to 4.00 percent; to 91 counties (16 percent) if mortgage rise to 4.25 percent; to 111 counties (19 percent) if mortgage rates rise to 4.50 percent; and to 152 counties (26 percent) if mortgage rates rise to 5.00 percent.

Click on any county to see the impact for that individual county.

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