Walmart Now Offers Mortgages, But Its Typical Buyer Probably Can’t Afford Today’s Housing Market
You can now apply for a mortgage at select Walmart stores, after partnering with Lenders One.
The typical Walmart buyer makes $80,000 a year and could be outrageously priced in today’s housing market.
Mortgage applications are falling as interest rates rise and some Americans are denied homeownership.
At Walmart, you can buy anything from Golden Girls-themed Chia Pet to ethically sourced dog nail polish — and now you can get a mortgage, too.
Lenders One Cooperative, a national alliance of independent mortgage bankers, banks and credit unions, recently announced a partnership with Walmart. The co-op will lease space in select stores in an effort to offer more mortgage solutions to shoppers. Currently operating in three locations, Lenders One says “there are many more opportunities to come”.
“I couldn’t be happier with the direction the co-op is taking,” Justin Demola, Lenders One CMB and President said in a statement, adding that his team already sees “tremendous” value in the solutions created for its members.
The typical Walmart shopper in the United States earns around $80,000 a year. With recent mortgage rate hikes and assuming a borrower would have to spend 30% of their income buying a home, chances are it will be overpriced in today’s market, where the average home price is $392,000. So while Walmart’s low offers may offer customers a discount on purchases, the convenience of Lenders One’s in-store offices cannot guarantee that they will be able to afford homeownership.
Historically low mortgage rates propelled a home-buying frenzy during the pandemic – but they are now reversing. As rates return to pre-pandemic levels and house prices continue to rise, affordability has hit an all-time low. Mortgage applications have mostly been down since December, so while Lenders One offers borrowers a convenient lending experience by locating inside Walmart, mortgage application may not fit the same budget. than buyers’ milk and coffee.
“For consumers, rising interest rates, lack of supply and strong house price appreciation have reduced refinancing activity and further limited the affordability of buying a home. which, of course, dampens lenders’ expectations of future business activity,” Doug Duncan, Fannie Mae senior vice president and chief economist, said in a statement.
Fewer and fewer Americans are applying for a mortgage
Pandemic-era mortgage deals are over as interest rates rise due to inflation. Rising rates could prevent many cash-strapped Americans from becoming homeowners.
In February, mortgage rates reached their highest level since the start of the pandemic and have been fluctuating ever since. Although rates fell slightly last week, they are still significantly higher than the same time in 2021. According to Freddie Mac, the average US fixed rate for a 30-year mortgage fell to 3.76% for the week ending March 3. a year ago at this time, the rate averaged 3.02%.
“Rate hikes are expected to continue due to a strong labor market and high inflation, which will likely negatively impact demand from homebuyers,” Sam Khater, chief economist at Freddie Mac at Insider.
In February, the median sale price of a home hit an all-time high of $392,000, according to Realtor.com. During the month, home prices rose at an “exceptionally fast” rate, the researchers said, signaling that competition among homebuyers will intensify this spring. As buyers compete for a limited amount of inventory, prices should continue to rise, especially if mortgage rates rise further.
“It can be easy to get carried away by the competition, so buyers should take the time to assess how higher mortgage rates might impact the affordability of monthly payments and consider adding a cushion to the top of their budget.” George Ratiu, Director of Economic Research and Senior Economist at Realtor.com, said.