Welcome to Thoughts on the Market.

I'm Jay Bakko, co-head of the US Securitized Products Research from Morgan Stanley.

And I'm James Egan, the other co-head of Securitized Products Research.

In this edition of the podcast, we'll be talking about the impact of a rising rate environment

on the US housing and mortgage markets.

It's Wednesday, April 7th, at 11 a.m. in New York.

Now Jim, mortgage rates are now almost 60 basis points above their all-time low.

They set the low right at the beginning of this year at two and five-eighths per cent.

And now we're close to 3.2 per cent per Freddie Mac's headline mortgage survey rate.

What does this mean to borrowers that are looking to buy a house?

Are homes still affordable or should they look elsewhere?

Great question.

We're in a materially different place than we were.

And when we think about how that flows through to the housing market, it's affordability.

Not only are mortgage rates higher, but home prices themselves continue to move dramatically

higher.

The most recent print from K. Schiller had them up 11 per cent year over year.

Both of those things combined are going to mean that that monthly payment, the principal

and interest payment that people make on their mortgage, is going to be materially higher.

So what does that mean?

The median price of an existing home, the most recent point we have, is $317,000.

Let's assume a 20 per cent down payment or an ADL TV loan on that balance.

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