Mortgage Rates Are Dropping

What Does That Mean For You?

Mortgage rates have been a hot topic in the housing market over the past 12 months. Compared to the beginning of 2022, rates have risen dramatically. Now they’re dropping, and that has to do with everything happening in the economy.

So, what does that mean for your homeownership plans? As mortgage rates fluctuate, they impact your purchasing power by influencing the cost of buying a home. Even a small dip can help boost your purchasing power. Here’s how it works.

The median priced home according to the National Association of Realtors is $379,100. So let’s assume you want to buy a $400,000 home. If you are trying to shop at that price point and keep your monthly payment about $2,500-$2,600 or below, here is how your purchasing power can change as mortgage rates move up or down. (see chart below) The red shows payments above that threshold and the green indicates a payment within your target range.

This goes to show, even a small quarter-point change in mortgage rates can impact your monthly mortgage payment. That’s why it’s important to work with me. I follow what the experts are projecting for mortgage rates for the days, months, and year ahead.

Bottom Line

Mortgage rates are likely to fluctuate depending on what happens with inflation moving forward, but they have dropped slightly in recent weeks. If a 7% rate was too high for you, it may be time to contact a lender to see if the current rates is more in line with your goal for a monthly housing expense.