In another odd twist for 2023, the ability to split up after a divorce seems to be another casualty of the high mortgage rate environment.
Couples who may have locked in a very low mortgage rate in previous years — but who are now seeking to end their marriages — are finding themselves needing to remain in their homes together as high rates make moving out an unaffordable prospect, according to a report at the Wall Street Journal.
“Mortgage rates are over 7% and average home prices have hit record highs,” the report says. “This means more couples can’t afford to leave their home with its less than 3% mortgage interest rates and set up two different households. Renting isn’t always an option either given that rents have risen more than 9% over the last two years.”
The reality has led to awkward arrangements for impacted divorced couples. Separately “assigned” floors for estranged spouses, separate purchases of groceries and scheduled times for doing their laundry, to name a few.
“One woman locks her bedroom door and keeps her supply of batteries and toilet paper in her closet,” the report says. “Many don’t tell colleagues about the set up because it seems unthinkable or they are embarrassed. They try to maintain civility for the kids and hold tight until they can afford to buy, rent and furnish two homes.”
In one example, a couple bought a Mesa, Arizona, home for $600,000 at a mortgage interest rate of 5.62% in the summer of 2022. The initial plan was to refinance when rates improved, but they’re now seeking a divorce and living in a home that has dropped in value.
The couple remains on amicable terms and stayed in the home together for two months, but when it became too awkward they sought out new living arrangements. One found an affordable rental via social media, while the other is staying in the house but is not making any payments on it until it sells.
Another estranged couple in the Phoenix area worked out an arrangement on their home with a 3.25% mortgage rate. The wife bought out 40% of the husband’s equity and agreed to pay the remainder within three years.
“She would have preferred a clean break from her ex, rather than dragging the commitment on for three years, but she says it was the only option given today’s elevated mortgage rates,” the report said of the arrangement.
The wife blamed elevated mortgage rates on the unusual arrangement.
“If rates weren’t so high, I would have sold the house and moved somewhere within the city or refinanced,” she told the Journal.
Related
Source link
