What mortgage rate would make buying a house in Utah affordable?

Mortgage rates would have to drop below 3% to put a median-priced home in reach for many Utahns, a new analysis found.

But for St. George-area residents, even an interest-free mortgage wouldn’t be enough for median earners to afford a typical home, according to Ziffy.ai, a New York-based real estate investment platform built around artificial intelligence.

The company identified 42 metropolitan areas nationwide out of 364 where the spread between the median income and a median priced home was so great that wiping out mortgage rates, which rose to an average of 6.55% last week, couldn’t make a purchase work.

The southern Utah area comes closer than some, though, exceeding the zero-interest affordability ceiling by less than $55 a month, data provided by the company to the Deseret News showed.

That’s because the monthly payment on a house at the nearly $627,000 median price point would total around $2,229 a month, but residents making the median income of just under $87,000 shouldn’t have to spend more than about $2,175 on housing.

Still, Amresh Singh, Ziffy.ai founder and CEO, said the situation demonstrates there’s no rates-only solution to making housing more affordable nationwide.

“St. George is a striking example of a market where lower mortgage rates alone do not close the affordability gap,” Singh said in a statement. “Principal, property tax and insurance already exceed 30% of median household income before any interest is added.”

While other Utah cities the company looked at were among the 110 nationwide where mortgage rates would have to fall below 3% for homes to become affordable, he pointed out current prices still exceed typical incomes.

“Across the five Utah metros analyzed, affordability remains strained even where local incomes are relatively high,” Singh said. “Salt Lake City and Provo both have median household incomes above $100,000, yet the typical listing remains out of reach.”

Live in the Salt Lake City-Murray metropolitan area and make the $100,548 median income? Mortgage rates would have to plummet to 2.29% to be able to afford the $570,450 median price tag for a home, the analysis found.

How about typical earners in the Provo-Orem-Lehi area, where the median income is a little higher at $101,014? Being able to buy the $572,450 median-priced home in that part of Utah County would require mortgage rates to tumble to 2.3%

For Ogden, it would take a 2.7% mortgage rate on a median salary of $98,456 to get a $537,425 median-priced house. In Logan, rates would need to be even lower, at 1.43%, for median earners who make $81,144 to buy a home with median price tag of $498,950.

The company said its model assumes 20% down, a 30-year mortgage, spending no more than 30% of gross household income on housing, 1.1% property tax and 0.5% homeowners insurance, and used data from Realtor.com and the U.S. Census.

Topping the list of places nationwide with the largest affordability gap is California’s Santa Barbara metropolitan area. There, the $95,637 median income falls more than $3,800 short of affording a monthly payment on the typical home’s more than $1.7 million price tag.

California cities hold seven of the Top 10 spots in the analysis, along with areas in Cape Cod, Massachusetts; Maui, Hawaii; and Bozeman, Montana. Just 48 of the 364 metro areas around the country were considered affordable at a 6.49% mortgage rate.

As of last Thursday, the U.S. average for a 30-year fixed-rate mortgage was reported at 6.55%, a 0.06 percentage point increase from the week ending July 9, by the Federal Home Loan Mortgage Corporation, better known as Freddie Mac.