Got $3,467 a month? Orange County house payment near 12-year high

Rising Orange County home prices combined with rising mortgage rates pushed a typical buyer’s house payment to a 10-year high in August.

And that monetary pain — $3,467 a month — could have been worse.

CoreLogic estimates monthly mortgage payments by looking at purchase prices, down payments and the use of fixed or adjustable financing for every mortgaged residence sold. So, taxes and insurance would be on top of that!

August’s typical buyer saw their house payment jump 9 percent in a year — or $287 a month. For most of 2018, homebuyers have faced the highest mortgage payments since the last cycle’s peak of $3,555 in July 2006.

Countywide appreciation didn’t help the house hunter’s budget. Orange County’s median selling price was $727,000 vs. $686,000 a year ago. That’s a 6 percent jump.

Nor did rising mortgage rates ease the pain.

According to mortgage buyer Freddie Mac, August’s average 30-year fixed-rate mortgage had a 4.55 percent rate vs. 3.88 percent a year earlier. (For history buffs — or the shoulda-woulda-coulda crowd — the 30-year rate fell to 3.3 percent in 2012 and dipped to 3.6 percent in 2016.)

The budget-saving adjustable loans were pricier, too: A typical hybrid mortgage — fixed for five years before adjusting — ran 3.87 percent rate in August vs. 3.15 percent a year earlier.

To be fair, these rates are still historical bargains. The last time the estimated Orange County buyer’s house payment peaked 11 years ago the median selling price was just $640,000. But the 30-year fixed rate was 6.8 percent, and that five-year hybrid was 6.4 percent.

So how did this summer’s buyer make their deal pencil?

Start with adjustable loans. Opting for the risk of higher rates five years down the road would have saved a buyer roughly $224 a month, or 8 percent.

That’s a key reason why 20.1 percent of Orange County’s mortgages used for purchases in August were adjustable vs. 16.3 percent a year earlier. That’s a 23 percent jump and the highest since July 2014.

Now before you say “yikes, trouble ahead” due to the built-in risks of variable-rate deals, please note Orange County’s all-time high use of adjustable mortgages: 82 percent, amid the buying/lending craziness of 2004! And 76 percent of purchasers used variable finance at the payment peak of July 2006.

(PS: Average adjustable mortgage use since 1988 is 33 percent.)

And another way August’s house payment was moderated was by higher down payments.

Orange County’s typical financed home saw the buyer put down 22 percent of purchase price vs. 21.1 percent in August 2017. That’s well above the 18.8 percent average since 1988 and the highest since March 2008.

It’s a good bet that rising down payments are not simply the byproduct of buyers with bigger checkbooks.

Yes, some folks are making really good money around Orange County. And many move-up buyers are reaping larger windfalls from the sale of their appreciated, previous homes and putting those profits toward their next residence.

But the same rising prices — plus higher loan rates — are likely preventing many other house hunters from buying. Orange County’s affordability challenges knock out folks who commonly use low downpayment deals — and artificially boosts the down-payment data.