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You Can Buy $25,000 More Home For Every $200,000
The Housing Headline
Home buyers have 12 percent more purchasing power as compared to last year.
The News Behind The Housing Headline
30-year fixed-rate mortgage rates have dropped close to a full percentage point from a year ago, raising your upper purchase price range by 12 percent.
The data comes from government mortgage agency Freddie Mac and its weekly mortgage rate survey of more than one hundred U.S. lenders.
This week’s survey shows the average 30-year fixed-rate mortgage rate at 2.72 percent nationwide for buyers willing to pay an optional, one-time discount fee of 0.7 percent at closing.
The same mortgage product averaged 3.66 percent last year.
Home buyers have more purchasing power.
- In 2019: $200,000 mortgage = $916 monthly payment
- In 2020: $225,000 mortgage = $916 monthly payment
This week’s surveyed rates are the lowest since Freddie Mac started tracking them in 1971.
Why This Housing News Matters To You
Mortgage rates change quickly. Home prices change slowly.
It’s why home buyers shouldn’t ask “How much house can I afford?” but, instead, “How much house can I afford today?”
Mortgage rates affect home affordability more than home price changes.
Every 1/8 percentage point change in mortgage rates is equivalent to a 1.5% rise (or fall) in home prices. Mortgage rates often move by that amount daily.
As rates drop this year, home buyers find themselves with 12% more purchasing power. It’s safe to upgrade your home search filters.
With your added purchasing power, you can now look for:
- Homes with an extra bedroom or bathroom
- Renovated homes instead of fixer-uppers
- Homes in higher-rated school districts
If a year ago, a $200,000 home fit within your budget, today, you can look for a $225,000 home for the exact same payment.
For help finding your maximum purchase price on today’s mortgage rates, use the chat and ask us your question.
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