If the hot housing market weren’t enough, home buyers now face rising mortgage interest rates. For many first-time buyers, that’s a double-whammy.

In the first quarter of the year, first-time home buyers had to make $59,665 a year to buy a home in Texas at $229,000. Now, buyers need to make about $10,000 more as mortgage interest rates jump to 5.25% by May 19, according to a study by the Texas Real Estate Center. 

Only 30% of Texans who rent, who would be considered first-time home buyers, can afford that, according to Clare Losey, an assistant research economist at the Texas Real Estate Research Center at Texas A&M University.

In the DFW area, the price for a starter home was $290,000, according to data from the Real Estate Research Center. 

“Each subsequent increase in a mortgage interest rate increases the required income to qualify for a mortgage loan,” Losey said. “Which just pushes that many more potential buyers out of the market for homeownership.” 

That affects first time-home buyers in Tarrant County like Britney Roberts, who has dreamed of her own house since she was a child. As she approaches graduating with her master’s degree in social work at the University of Texas at Arlington, she thought buying her first house would be a good way to celebrate. 

But it hasn’t been easy. Houses are more expensive, and it’s a competitive market. 

“It’s kind of hard, you know, sometimes because you’re close … when you’ve waited for something so long,” Roberts said. “And you’re about to graduate and you’re like, ‘Well, this is not going according to my plan.’”

Roberts said she’s noticed the changes in mortgages. 

“I have to just sit back and ask myself: ‘I know you want this home, but the (monthly) mortgage will be $2,000. Do you want to pay $2,000 just to say you have a house?’” Roberts said.

Mortgage rates are rising as the Federal Reserve hikes interest rates to wrangle inflation. When the Federal Reserve increases rates, the cost of borrowing increases, such as credit card loans, car loans, student debt and mortgage loans. As the Fed’s most recent interest rate hike marks the largest increase since 1994, mortgage interest rates will respond, Losey said. Right now, the average 30-year mortgage rate is 5.89%, according to data from NerdWallet. 

But Nadia Evangelou, senior economist at the National Association of Realtors, said mortgage rates won’t jump as much despite the aggressive jump by the Federal Reserve this month. By the end of March, mortgage rates jumped about 80 basis points — from 3.9 to 4.7%. 

Even though the Federal Reserves’ rate increase was more aggressive in May, mortgage rates jumped by less than 20 basis points.

“I don’t expect to see this sharp increase that we had back in March and April,” Evangelou said. 

Roberts hasn’t given up on her dream of buying a home. She is attending a class through Housing Channel, which partnered with the city of Fort Worth to provide mortgage payment assistance. 

The city of Fort Worth’s Homebuyer Assistance Program can provide up to $20,000 in mortgage assistance for eligible residents.

Roberts encourages first-time homebuyers like her not to give up in their search.

“Just be hopeful, because things can change in a blink of an eye, and things are constantly changing,” Roberts said. “Hopefully, it changes for the good.” 

Seth Bodine is a business and economic development reporter for the Fort Worth Report. Contact him at seth.bodine@fortworthreport.org and follow on Twitter at @sbodine120.

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Seth Bodine

Seth Bodine is the business reporter for the Fort Worth Report. He previously covered agriculture and rural issues in Oklahoma for the public radio station, KOSU, as a Report for America corps member....