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Luke Sharrett/Bloomberg With two major disasters striking the U.S. within weeks, awareness of insurance challenges many homeowners encounter is coming to the fore, and servicers find themselves caught in the middle.Even before Hurricanes Helene and Milton slammed the Southeastern U.S., homeowners in several states, including storm-ravaged Florida, already were seeing skyrocketing premiums and the departure of several insurance carriers.With 2024 already one of the most devastating hurricane seasons this century, further price hikes and decreased availability are likely in the offing if recent historical trends are an indicator. As entities that regularly keep their eyes on mortgage borrowers' ability to pay, servicers frequently end up playing the role of bad cop when the insurance industry provides unpleasant surprises. "I'm sure that we are the deliverer of bad news, and this does not sit well with all homeowners," said Larry Goldstone, president of capital markets and lending at BSI Financial Services.Servicers can prepare themselves for expected borrower stress, though, applying strategies they've learned. Earlier this year, leaders discussed with National Mortgage News how current homeowners insurance challenges were impacting their customers and possible methods that might help alleviate concerns for stakeholders. Keeping borrowers informedWith servicers often holding funds in escrow to make premium payments on homeowners' behalf, BSI typically reaches out to customers two months or more in advance of insurance. The notification might be the first time a borrower realizes the extent of a premium increase, requiring their servicer to also plan accordingly. "To the extent that homeowners don't have enough money escrowed, we will then be adjusting their mortgage payment higher on a go-forward basis," Goldstone said. "I am sure that we're having some difficult conversations with homeowners."An increasing number of homeowners today, though, seem to realize a hit to their wallet might be in store and are educating and preparing themselves. Their efforts to become better informed have eased stress on servicers. As news of the high cost of insurance spreads through news or social media, "the conversation is actually much better than it used to be," said Adel Issa, senior vice president of customer contact and loss mitigation for Carrington Mortgage Services. "It's part of everybody's vernacular now that, 'My insurance premium went up, not necessarily, my mortgage went up.'"Still, sticker shock leads to disgruntled customers, but detailed breakouts of the individual amounts on a bill at least brings them clarity."A lot of people understand immediately. We tend to be very detailed in our letters that we send out to our customers regarding before/after," Issa said. Lessening the blow to borrower financesFannie Mae and Freddie Mac, which require certain types of insurance on the loans they purchase, have suggested that large spikes in monthly payment amounts could be spread over time to lessen the effect of impact on borrowers, Goldstone noted."We have some latitude there around what we can do," Goldstone said. "We can spread the increment over a year, or anything from a year to five years. We can try to cushion the blow there a little bit."However, such efforts to help a borrower could affect servicer cash flow detrimentally in a way that must be accounted for as well. While a borrower's payments can be spread out, the servicer is still remitting the full premium amounts to insurers. "We're effectively loaning the borrower money at zero interest and then recovering it over time," Goldstone said.When costs are still too highWhen vulnerable communities see insurance carriers leave or costs jump to insurmountable levels following natural disasters, the search for coverage produces greater stress to already struggling borrowers. Servicers can better assist clients through self-help tools or by placing opportunities to find assistance in their client portals. Carrington's borrower dashboard called Homeamp also allows borrowers to take a detailed look at their account and may be able to offer options separate from new insurance coverage, including second liens or refinances, to reduce overall payment amounts.  "There's all those little things that are unique to the customer. So Homeamp is unique to what the customer's actual numbers are," Issa said.BSI puts a link to a third-party marketplace on its portal and website that lists a range of homeowners insurance coverage beyond the most well-known brands. "There are lots of other insurance carriers out there that homeowners might not have heard of that operate in the market they're in," Goldstone said. "It's become much more valuable for homeowners in light of what has happened with insurance premiums over the last couple of years." Some insurance carriers on the marketplace often require consultations meant to help borrowers make the most cost-effective choice.The insurance of last resort Lender-imposed coverage becomes the solution of last resort when a client can't or refuses to obtain adequate coverage. When efforts have been exhausted, servicers have a right to force place insurance to ensure compliance. The coverage, though, typically will not cover homeowner possessions and is much more expensive than insurance the borrower could find themselves.  "That's going to have a deleterious impact on the borrower's monthly mortgage payment, or potentially put the borrower at risk of defaulting or delinquent," Goldstone said. Servicers can be protected if a home proceeds through foreclosure after force-placed insurance is applied, though. Servicers will likely have made insurance payments if clients refuse, entitling them to recovery upon liquidation."We're at the top of the waterfall," he added.

Gabby Jones/Bloomberg This news is developing. Please check back here for updates.JPMorgan Chase reported a steep year-over-year increase in credit costs Friday, as the largest U.S. bank by assets sought to cover a surge in net charge-offs and added $1 billion in reserves.For the third quarter, the megabank's provision for credit losses more than doubled to $3.1 billion. Net charge-offs for the three months ended Sept. 30 were $2.1 billion, up 40% year over year and largely driven by card services, JPMorgan said. A year ago, the bank recorded a net reserve release of $113 million.The majority of net charge-offs occurred in JPMorgan's consumer and community banking segment, which includes its credit card business. Net charge-offs in the segment totaled $19 billion, up $520 million from the year-ago quarter and driven by card services, the bank said.Despite signals that the U.S. economy is improving, JPMorgan boosted its reserves for credit losses by $876 million. In a press release announcing the results, the company said reserve build was largely tied to card services, which experienced "growth in revolving balances and changes in certain macroeconomic variables."Overall, the higher provision put a crimp in JPMorgan's net income, which was $12.9 billion, down 2% compared with the third quarter of 2023. Still, the company's earnings per share topped expectations at $4.37. Analysts polled by S&P had expected earnings per share of $3.98.Revenue for the period was $43.3 billion, up 6% year over year. The company's net interest income was a factor, up 3% for the quarter, while noninterest income rose 11%, the bank said. Fee income included a 29% increase in investment banking revenues. JPMorgan raised its guidance for full-year net interest income and full-year expenses. The company now projects net interest income will be about $92.5 billion for 2024, up from the forecast of $91 billion that it provided in July. Full-year expenses, excluding legal fees but including an early special assessment by the Federal Deposit Insurance Corp. and a contribution to the firm's foundation, are now forecast to be $91.5 billion, about half a billion dollars less than what it laid out this summer.Last month, at a conference, President and Chief Operating Officer Daniel Pinto warned that analysts' expectations for 2025 revenue and expenses are "not very reasonable," since lower interest rates would reduce interest income and inflation is keeping costs elevated.Consensus estimates for 2025 include $90 billion in net interest income and $93.7 billion in expenses. The day of Pinto's comments, the bank's shares fell by 7% at some points. The stock is currently up about 25% for the year. In Friday's press release, Chairman and CEO Jamie Dimon commented on recent regulatory moves, saying, "We await our regulators' new rules on the Basel III endgame and the G-SIB surcharge as well as any adjustments to the SCB or CCAR. We believe rules can be written that promote a strong financial system without causing undue consequences for the economy, and now is an excellent time to step back and review the extensive set of existing rules — which were put in place for a good reason — to understand their impact on economic growth, the viability of both public and private markets, and secondary market liquidity."

Wells Fargo's third-quarter profits fell as earnings were hit by a $447 million net loss from restructuring its debt investments and an 11% drop in net interest income.The San Francisco bank said Friday its net income slid to $5.1 billion in the three months ended Sept. 30, from $5.8 billion a year ago. Rising costs on customers' deposits have pinched the company's margins over the past year, and the pressure appears to have continued in the last quarter. Net interest income fell to $11.7 billion from $13.1 billion in the year-ago quarter, and the company told investors to expect its full-year figure to be down 9%.Net income of $1.42 per diluted common share came in above analyst estimates of $1.28 per share, according to S&P Capital IQ data.Noninterest income rose to $8.7 billion from $7.8 billion a year ago, driven by Wells Fargo's venture capital investments and investment banking fees, a business the company's been overhauling in recent years.Provisions for credit losses were down 11% from a year ago to $1.1 billion, with lower allowances across most loan portfolios partially offset by a higher allowance for credit card loans that was driven by an increase in balances, the bank said.CEO Charlie Scharf, who came onboard to overhaul the bank in late 2019, said, "Our earnings profile is very different than it was five years ago as we have been making strategic investments in many of our businesses and de-emphasizing or selling others. Our revenue sources are more diverse and fee-based revenue grew 16% during the first nine months of the year, largely offsetting net interest income headwinds.""While our risk and control work remains our top priority, we continue to invest to drive more diverse and stronger growth and higher returns," Scharf said, citing the launch of two co-branded credit cards and a multi-year co-branded agreement for auto financing.The results came weeks after Wells Fargo was hit with an enforcement action from bank regulators, which cited shortcomings in how the company guards against money laundering. Some investors have since worried that Wells Fargo, which earlier this year looked to be in better shape with regulators, may be further away from getting freed from a regulatory-imposed asset cap.Bloomberg News reported last month that Wells Fargo submitted an outside review of its reformed operations to the Federal Reserve, a milestone in the company's work. The Fed imposed the asset cap in 2018 following the bank's consumer abuse scandals. The timeline has stretched far beyond what now-ousted executives once hoped. But investors have salivated over the possibility that the Scharf-led turnaround is almost complete, potentially supercharging the bank's growth. The bank's stock price has risen 17% this year partly over those hopes.

Joe Ventrone has worked in housing policy since 1974. That is almost as long as the Department of Housing and Urban Development has existed.One of his first jobs was as an elevator operator in the U.S.Senate from 1971 to 1973. Since elevators were already automatically run at the time, Ventrone's job was mainly "organizational and traffic control," he said.Reminiscing Ventrone recalls frequently running into the current president."I got to know this new senator from Delaware who lost his wife, named Senator Joe Biden," said Ventrone. "So what's really interesting in my life now is I'm sitting here seeing President Biden going through everything he's going through. And I looked back and I said, 'Gee, I knew him when he was first elected to the U.S. Senate and I talked to him.'"  Afterwards, Ventrone went on to work two separate stints at HUD, also serving for 17 years as the deputy staff director at the House Financial Services Committee. He also spent 22 years at the National Association of Realtors. Currently, the housing policy veteran is a consultant for NAR and is also writing a book rehashing his adventures working on Capitol Hill.Ventrone says the main issue facing housing is the lack of supply. And only once that is addressed, affordability will increase in tandem. He thinks manufactured housing and rezoning are answers to how supply can be increased in the short-term.Speaking of HUD, where in total Ventrone worked for almost a decade, the agency has outlived its usefulness, the housing vet said. "HUD was created in the 60's and since then things have changed," he said. "It has to be significantly transformed because right now it's still operating the same way as it was when it was first created."Vetrone sat down with National Mortgage News to discuss the most impactful housing legislation in the past five decades, why he might be a good choice for a housing czar and the future of affordable housing.

German lender Deutsche Pfandbriefbank AG will cut back on office and US loans after the property crisis forced it to scrap a dividend and set aside hundreds of millions of euros to cushion against defaults."The relatively high weighting of the asset class office is to be gradually reduced in the coming years," PBB said in a statement Thursday. It will target business in areas such as data centers, senior living and hotels. The geographic focus will be on Europe. In the U.S., PBB plans to do some business on the East Coast and to discontinue lending on the West Coast.PBB, which has a significant exposure to U.S. and office real estate, earlier this year became one of the most prominent examples of European banks hit hard by fears that troubles in US property markets are spreading to Europe. Chief Executive Officer Kay Wolf has sought to revive the firm by selling loans and diversifying into asset management.The US accounted for about 12% of PBB's €29 billion ($31.7 billion) performing real estate loans as of June, and for almost half of the lender's soured real estate debt. Offices made up about 50% of the overall portfolio, and PBB intends to bring the share down to below 40%, it said.Shares of PBB fell 3.5% at 12:22 p.m. in Frankfurt, bringing declines this year to 5.9%."The ongoing shifts to home working and online shopping will likely limit new office and retail investments to the most desirable locations," Moody's Ratings said in a report this week. "New CRE investments will favor sectors like data centers and logistics properties."PBB intends to distribute at least 50% of its profit after tax and AT1 coupons to shareholders until 2027, it also said. Apart from dividends, the lender also plans to conduct share buybacks.PBB was created in 2009 from the functioning parts left behind by the collapse of Hypo Real Estate, a mortgage lender that became Germany's biggest casualty of the financial crisis. The government sold much of its stake in PBB through a public listing in 2015 and divested completely in 2021. 

It’s not quite Halloween just yet, but home buyers may have already gotten a good scare.The 30-year fixed mortgage, for which most buyers rely upon, jumped from around 6% to nearly 6.75% in the span of about three weeks.And this took place right after the Fed finally pivoted and cut its own fed funds rate. Good timing I know.Prior to this rate reversal, mortgage rates had steadily fallen all the way from 8%, their present cycle high that ironically took place just before last Halloween.Talk about a good year for rates, moving down two full percentage points. But the trend is no longer our friend, at least in the interim.Now I’d like to make a case for why this actually might be good for the housing market.Higher Mortgage Rates Might Motivate More Than Lower RatesI know what you’re thinking, higher mortgage rates can’t possibly be good for the struggling housing market.Especially this housing market, which is presently one of the most unaffordable in recent history.But bear with me here. I got to thinking recently how the low mortgage rates didn’t seem to get prospective home buyers off the fence.As noted, rates came down quite a bit from their cycle highs, falling about two percentage points.In Mid-September, you could get a 30-year fixed for around 6% for the average loan scenario. And in reality, much lower if you had a vanilla loan (high FICO, 20% down, etc.) and/or went with a discount lender.The same was true if you paid discount points at closing. I was even stumbling upon rates in the high 4% range at that time.Surely that would be good enough to get prospective buyers to bite. But the mortgage application data just didn’t respond.You can blame seasonality, given it being a suboptimal time for rates to hit their lowest levels since early 2023.But if you look at the seasonally adjusted home purchase application index from the Mortgage Bankers Association (MBA), you’ll see it barely budged. See the chart above from Trading Economics.Meanwhile, refinance applications surged, granted they are much more rate-sensitive. Still, given the best rates in years, home buyers just didn’t show up.And this was surprising because there had been a narrative that they’d flock to the housing market the second rates dropped.In fact, there were some who argued to buy a home early to beat the rush. That too seemed to be little more than a misguided dream. And it might all have to do with motivation.Maybe Home Buyers Wanted Even Lower Mortgage RatesWith the power of hindsight, perhaps the culprit was the idea that falling mortgage rates simply make home buyers thirsty for better.It’s a weird psychological thing. Once you get a little of something good, you want even more. And once you get more, it doesn’t seem as good as it once was. You need even more.Simply put, falling mortgage rates seemed to prove less motivational than rising rates, as strange as that sounds.When rates are going up, there’s an intense urgency to lock in a rate before they get even worse.When rates are falling, you might bide your time and wait for even better. That appears to be exactly what prospective buyers did.Despite previously being told to beat the rush, they were now being told to wait. So not only did lower rates not get buyers off the fence, they almost entrenched them further.Of course, I’ve argued recently that it’s no longer about the mortgage rates, and could in fact be other things.It might be uncertainty regarding the economy, it could be home buyer burnout, it could simply be that home prices are too high. Yes, that’s a possibility too!However, and here’s the even stranger thing, now that buyers have been spooked with higher rates, that could actually get them to jump off the fence!(photo: Marcin Wichary) Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.Latest posts by Colin Robertson (see all)

David Paul Morris/Bloomberg When it comes to technology in their new homes, aspiring buyers have an eye on the environment, savings and security, with the availability of tools supporting those aims playing a role in final purchase decisions. The top eight technology features buyers value lean toward providing improved energy efficiency or safety, according to research published by the National Association of Home Builders. Respondents were asked to rate 19 items, noting how important it was for them to have when searching for a property.Of the features, 16 were categorized as either essential or desirable by at least 50% of buyers. At the top of the list was a programmable thermostat, prioritized by 78%. Forty-nine percent deemed it a must-have, while 29% considered it desirable.Just behind were security cameras at 76%, but the share of aspiring homeowners listing it as essential finished ahead of thermostats at 50%.  The third and fourth positions were also focused on safety, with video doorbells and wireless home security systems taking the spots. Buyer shares of 74% and 70% called them essential or desirable. Rounding out the top five was a multizone heating, ventilation and air conditioning system, finishing at 68%. Each of the top eight technology items were considered an essential must-have by more than one-third of respondents, with the percentage describing them as such ranging from 41% to 50%. Buyers' emphasis on energy-efficient solutions corresponds to policy developments affecting newly built homes introduced by government housing regulators this year. In April, both the Federal Housing Administration and the U.S. Department of Agriculture instituted minimum energy standards for new residential constructions that are meant to provide cost savings and resilience in the face of extreme weather events.     "The most cost-effective moment to invest in common sense energy efficiency is when you're building a new home," said Marion McFadden, principal deputy assistant secretary for community planning and development at the U.S. Department of Housing and Urban Development, at the time.In September, eight U.S. senators also pressured the Federal Housing Finance Agency to join its peers in introducing minimum standards. FHFA Director Sandra Thompson previously signaled that such a rule might be put into place at the end of the second quarter. "Aligning new home energy standards with updated model codes will save money for homeowners and renters across the country. HUD and USDA found that the increased initial costs of construction are more than made up for by lower monthly energy costs," the senators' letter stated. 

Pending home sales rose annually for the first time in three years, Redfin found, an indicator that market conditions around flattening mortgage rates and still-constrained inventory are not holding back buyers.Meanwhile, Redfin's own buyer demand measurement of tours and other sale services its agents provide, rose to its highest level since May for the period ended Oct. 6.Other signs of the shift in the purchase environment is September's small but significant annual increase in mortgage rate locks for this purchase.The most recent Mortgage Bankers Association Weekly Application Survey found submissions to buy homes were flat compared with the prior period even though interest rates were higher.Mortgage rates, while increasing by 20 basis points this past week to their highest level since the start of September, are still 125 basis points lower than they were last year at this time, another positive for the purchase market.Pending home sales were up 2% for the four weeks ended Oct. 6 versus the same time last year, Redfin said. Its Homebuyer Demand Index also was up 2% year-over-year on that same date. It was up 5% from one month earlier.Redfin attributed the growth to some consumers entering the market following the September Federal Open Market Committee rate cut, although some observers have opined that other potential buyers might be waiting for future reductions in November and December."House hunters are monitoring mortgage rates closely, but so far, the increase in rates isn't slowing buyers down. The home I listed on Thursday got a lot of traffic over the weekend and received 10 offers," said Shoshana Godwin, a Redfin agent from Seattle, in a press release. Mortgage rate movements are hard to predict, especially given the volatility in the market."A buyer may lock in a slightly higher rate now than they would have two weeks ago, but if they wait, it's possible rates will increase more," Godwin said. "It's also possible rates drop more significantly, which could heat up competition."

Mortgage fintech Loansnap can no longer originate loans in Connecticut, a filing released by a state regulator in early October shows.The revocation of its license in that state comes after allegations of shortcomings in reporting and staffing compliance. Loansnap also seems to have fallen into financial trouble, resulting in an eviction from its California office and mounting litigation for nonpayment to various companies. The company's woes were first reported by TechCrunch.According to a filing by a Connecticut state regulator, its license is not being renewed due to a number of factors, including the company dropping the ball in timely reporting a change of address in the Nationwide Multistate Licensing System and Registry.But also because Loansnap has failed "to demonstrate that its financial responsibility, character and general fitness are such as to command the confidence of the community," Jorge Perez, banking commissioner in Connecticut, wrote in a consent order Oct. 2.The state watchdog lists out numerous infractions by the fintech lender, including making false statements in its NMLS form where Loansnap did not outline outstanding judgments or liens against it, instead opting to state that it had none, the regulator wrote.In reality, Loansnap is being sued by a number of stakeholders, including Wells Fargo Bank, Optimal Blue, Mortgage Capital Trading, and MGR Real Estate, the fintech lender's previous landlord.Litigation by Wells Fargo accuses the fintech lender of selling it a loan that did not meet contractual requirements. It is asking for over $400,000 in damages.Optimal Blue is seeking a little over $200,000 for unpaid services, meanwhile, MGR Real Estate, which evicted Loansnap in May, is suing the company for $537,3043 for past due rent.All of these findings from the regulator's investigation casts doubt on Loansnap operating "honestly, fairly and efficiently," wrote Perez.Loansnap, which has one remaining licensed office in Arizona and sponsors six loan officers, could not be reached for comment at the time of this writing.Events leading to the company's loss of its license occurred earlier this year when it applied for a renewal and instead received a cease and desist order related to allegations that some of its staff performed unlawful mortgage activity. That order threatened potential revocation of its license to do business in Connecticut.In a filing dated Jan. 4, the state claimed Loansnap used unlicensed mortgage originators between August and December 2022, when they accepted applications, solicited potential borrowers and offered or negotiated residential loan terms in violation of both the federal Secure and Fair Enforcement for Mortgage Licensing Act and state laws. The lender "denied in large part" the allegations asserted, Connecticut filings at the time show. The filings did not provide details of the company's response to the state.Loansnap has raised $57.7 million in four funding rounds from 14 investors, S&P shows. TechCrunch, sharing information from venture capital database Pitchbook, says the company has raised about $100 million since 2017. This included $19 million Forte Ventures invested last July. Pitchbook also reported the lender has $12 million in debt.

Over the past several years, we’ve been entirely focused on high mortgage rates.The 30-year fixed surged from sub-3% levels to around 8% in the span of less than two years.This obviously got the attention of everyone, whether it was the media or everyday Americans.But often it felt like home prices were overshadowed by interest rates, despite also surging higher.In the United States, home prices have risen nearly 50% since just 2019, and have basically doubled since bottoming a decade ago.We’re Focused on Mortgage Rates, But What About Home Prices?I get it, the rise in mortgage rates was unprecedented. While they only went up to around 8% this cycle, the increase in such a short period is record-breaking stuff.For context, the 30-year fixed went from about 3% to 8%, which is a 167% gain, from early 2022 to late 2023. That’s an extremely small window of time to see such an increase.Conversely, the 1980s mortgage rates went from 9% to 18%, only a 100% increase. And it took four years. They only didn’t stay that high for more than a few months before retreating back to the low teens.Either way, it’s clear mortgage rates have been top of mind for everyone because of this dramatic rise.And the higher rates have had real implications. Housing affordability was historically okay prior to the mortgage rate run-up, but quickly surpassed the early 2000s housing bubble peak late last year, per ICE (see chart below).Affordability has since improved a bit as rates have decreased, but it remains pretty poor and using 2008 as a yardstick probably isn’t prudent.But the point I’m trying to get at here is it’s not just the rates. As I pointed out last week, we have a high loan amount problem as well.Let’s Consider a Home That Is Currently for Sale Near MeI got the idea for this post after receiving a text message about a home for sale nearby.It was one of those unsolicited text messages from a real estate agent advertising their listing.These always pique my interest because they provide a quick housing market temperature.The property in question is selling for about $1.7 million, which immediately seemed steep for the area. But it’s also not an outlier given how much prices have risen.The breakdown on Redfin was a monthly PITI payment of roughly $11,200. That assumed a 20% down payment (only about $340k!) and a 7% 30-year fixed mortgage rate.One you throw in homeowners insurance and property taxes, you’re looking at a pretty steep five-digit payment. Ouch!Now I wanted to get context so I looked at properties nearby the subject, and found one that was backed up to it and fairly similar.Sure, not as updated and a little smaller, but still close enough for me. The current homeowners purchased it in 2015 for about $750,000.Right off the bat, we’re talking about a property that is double in price, despite backing up to one another and being fairly similar.That means the increase in PITI goes beyond just a higher mortgage rate. And don’t forget the massive down payment either.The same 20% down on the comparable property was just $150,000. As for the PITI, only $3,700!That’s a difference of $7,500, or a percentage increase of 200%!Comparing Monthly Payments Across Different Mortgage Rates$1.7M Home PurchaseMonthly PITI7% rate$11,2006% rate$10,3005% rate$9,4504% rate$8,700Let’s just ignore the fact that the price is the price and look at different payments with various mortgage rates.At the 7% 30-year fixed that Redfin is using by default, the monthly PITI is $11,200. We knew that already.But what about a rate of 6%? Still a whopping $10,300 per month, or nearly triple the comparable property.At 5% we get a monthly housing payment of $9,450. At least it’s not in the double-digits anymore, right?And finally, at a rate of 4%, which is pretty darn low, the PITI is still $8,700 per month! That’s still 135% higher than the comp home.So basically if mortgage rates returned to near-record lows, the payment is still pretty astronomical compared to the home buyer who purchased a like property less than a decade earlier.If you want to say hey, it’s been nearly 10 years, that’s an unfair comparison. I see similar properties purchased in 2017, 2018, and 2019 for about $850,000 or $900,000.Simply put, home prices alone have put affordability out of reach for many. And the higher mortgage rates we’re just an insult to injury.Do We Have a High Home Price Problem?As illustrated, even a 4% mortgage rate doesn’t bring mortgage payments down enough to make a home purchase affordable for many.Paying nearly $9,000 per month while your neighbor is paying $3,700 seems pretty ridiculous.So the next most obvious place to look is home prices. But we know that home prices are sticky and rarely fall, at least on a nominal (non-inflation adjusted) basis.This means it’s hard to get much relief there unless there a meaningful uptick in supply, which could lead to lower prices.But that brings up the other reason why home prices are so high to begin with. There has been a severe lack of existing home supply for years in many markets nationwide.And it only grew worse when mortgage rate lock-in reared its ugly head. The one bright spot might be rising wages, which take some bite out of the price increase.However, it’s not enough on its own. You need all three components to restore affordability, including rates, prices, and wages.Sure, mortgage rates and home prices can come down together, and they might need to in order to restore affordability.Read on: It’s no longer a mortgage rate story. Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.Latest posts by Colin Robertson (see all)