LendingTree Finds Renters Paying Less Than Homeowners

Renters are saving more than $600 a month over homebuyers nationwide, according to a report released Wednesday by LendingTree.

Researchers with the Charlotte, N.C.-based mortgage broker found higher all-in costs for homeowners with a mortgage in all 50 states based on Census data.

Also on Wednesday, the Mortgage Bankers Association reported that its index of purchase mortgage applications for the week ending May 14 was a seasonally adjusted 4% lower than the previous week.

Joel Kan, the MBA’s assistant vice president of economic and industry forecasting, said the shortage of houses is driving up prices, resulting in the average purchase application reaching $411,400 last week — its highest level since February. Applications fell for both conventional and government loans.

“There continues to be strong demand for buying a home, but persistent supply shortages are constraining purchase activity, and building material shortages and higher costs are making it more difficult to increase supply,” Kan said.

The LendingTree report used data from the U.S. Census Bureau’s 2019 American Community Survey with five-year estimates to determine the median costs to own and rent a home in the nation’s 50 largest metropolitan statistical areas.

The largest gaps in housing costs were found among the usual suspects: New York, San Francisco and San Jose, Calif. On average, homeowners with a mortgage spent about $1,200 more per month on housing costs, including utilities, fees and taxes.

The gap was narrowest in Orlando, Fla., Tampa, Fla., and Indianapolis. Homeowners there paid $335 per month more each month than renters.

In New York, the average monthly cost was $1,439 for renters versus $2,802 for homeowners with a mortgage.

Indianapolis renters paid $916 per month, compared with $1,280 for homeowners with a mortgage.

The MBA, based in Washington, D.C., found overall mortgage applications rose 1.2% last week as refinances grew 4% to account for 63.3% of applications, up from 61.3% the previous week.

Kan said the increase in refinances occurred even as mortgage rates rose to their highest levels in two weeks.

“Rates were still lower than levels reported in late March and early April, providing additional opportunity for borrowers to refinance,” Kan said. “Ongoing volatility in refinance applications is likely if rates continue to oscillate around current levels.”