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Zillow on Monday unveiled a new tool that allows home shoppers to filter listings based on a monthly budget as fluctuating mortgage rates and home prices continue to stymy buyers.
The new filter on the Zillow app enables users to search for homes within a range of monthly mortgage payment prices that fit their budget, instead of just listing prices. The filter changes as mortgage prices go up and down, meaning search results will stay within a shopper’s budget, regardless of how mortgage rates move.
“Shoppers looking at list prices struggle to figure out what they can really afford because the mortgage rate is what makes or breaks a monthly payment,” Amanda Pendleton, consumer finance expert at Zillow Home Loans, said in a statement. “Adding in costs like taxes, insurance and HOA fees can quickly bust a shopper’s budget. This new search tool does the math, so shoppers can confidently jump into finding a home they love and can afford.”
Monthly mortgage costs have risen by $431 over the past year and remain highly volatile, often swinging $100 in either direction in the space of a month. High mortgage rates combined with high home price appreciation have resulted in monthly mortgage costs nearly doubling since 2020.
Typical home values peaked in June 2022 before tapering off slightly, but mortgage rates, which hit 20-year highs later that year, caused monthly mortgage payments to peak in October, according to Zillow data.
“Fast-rising mortgage rates last year pushed monthly costs up with unprecedented speed, dragging affordability to its lowest point in more than 20 years,” Orphe Divounguy, senior macroeconomist at Zillow Home Loans, said in a statement. “Beyond the high costs, volatile mortgage rates have made it extremely difficult to plan and budget to buy a house.”
Another proptech, Nester, rolled out its home cost tool in late 2022. Reviewed by Inman in October, the company was described as “a sharp, easy-to-understand application for helping homebuyers make sense of what a home will cost them above and beyond their mortgage payment.”
Using existing MLS, public data and, when needed, user input, Nester generates a series of colorful, cogent cost reports that detail what it takes to manage a house from years 1-5, 6-10 and beyond. It can be used during active home searches and by existing owners, and it can help agents earn the attention of investor clients.
The new Zillow feature allows users to input their desired down payment amount, income and debts to calculate the monthly mortgage payment they can afford at the current mortgage rate. Updated mortgage rates will feed into the filter, showing homes they can afford and hiding ones outside of their budget.
The filter is already available on the Zillow app and will soon be made available on its webpage, the company said in an announcement on Monday.