What Lower Mortgage Rates Mean for Your Purchasing Power
January 12, 2024
If you’re considering buying a home, understanding how mortgage rates influence your affordability and monthly payments is crucial. Fortunately, 30-year fixed mortgage rates have notably decreased since the end of October and are presently below 7%, as reported by Freddie Mac (see graph below):
This recent trend is great news for buyers. As a recent article from Bankrate says:
“The rate cool-off somewhat eases the housing affordability squeeze.”
And according to Edward Seiler, AVP of Housing Economics and Executive Director of the Research Institute for Housing America at the Mortgage Bankers Association (MBA):
“MBA expects that affordability conditions will continue to improve as mortgage rates decline . . .”
Here’s a bit more context on how this could help with your plans to buy a home.
How Mortgage Rates Affect Your Search for a Home
Recognizing the relationship between mortgage rates and your monthly home payment is vital as you aspire to become a homeowner. The accompanying chart illustrates how alterations in mortgage rates impact your ability to afford a home. Consider a scenario where your budget accommodates a monthly payment ranging from $2,400 to $2,500, as depicted by the green section in the chart (see chart below):
As illustrated, even slight fluctuations in rates can impact your budget and the loan amount within your affordability range.
Get Help from Reliable Experts To Understand Your Budget and Plan Ahead
When considering a home purchase, seek guidance from a local real estate agent and a trusted lender. They can assist you in exploring various mortgage options, understanding factors influencing rate changes, and assessing the impact on your situation.
By analyzing current numbers and recent data, and adapting your strategy to today’s rates, you’ll be well-prepared and equipped to navigate the process of buying a home.
Bottom Line
If you’re considering buying a home, the recent decrease in mortgage rates is positive news for your plans. Let’s connect and discuss the next steps in your home-buying journey.
