Buyer Purchasing Power Continues to Recover

The mortgage sector reports today that during the last months, mortgage interest rates have reacted to favorable economic news and are now considerably lower than last October’s painfully high numbers. This adds up to additional purchasing power for buyers.

For example, homebuyers on a $3,000 monthly mortgage repayment budget may qualify for financing for a $453,000 home with a 6.7% mortgage rate (depending on down payment, credit score and other factors). This adds up to a nearly $40,000 increase in purchasing power when compared to last October.

To look at affordability from another perspective, the monthly mortgage payment on a typical home, with a sticker price around $363,000, is $2,545 with a 6.7% rate. The monthly payment for the same property was nearly $200 higher–$2,713–when rates were at 7.8%.

While today’s mortgage rates are still double the record-low pandemic rates, home buyers are coming to terms with mortgage financing that’s within the 6% interest rate.

Buyers are snapping up homes because even though rates haven’t plummeted, people are realizing that the longer they wait to buy a home, the more competition they’re likely to face.”