Despite lower mortgage rates, upper middle-class Americans who bought homes or rented apartments in 1997 spent more of their paychecks on monthly mortgage and rent payments than they would have the year before, according to the accounting firm Ernst & Young.

The firm's annual study of housing affordability predicts that affordability in this market segment will decline rapidly in the next few years. The squeeze in affordability may put "some strain on mortgage underwriting criteria, as people with reasonably good incomes don't qualify for houses they would like to have," said Steve Friedman, national director for housing at E&Y Kenneth Leventhal, the real estate division of Ernst & Young.

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