Record low mortgage rates help home buyers stretch budget
Thanks to mortgage rates near all-time lows, a homebuyer with a monthly housing budget of $2,500 now has $33,250 more buying power than a year ago. This is according to data crunched by online real estate site Redfin.
Based on current average 30-year fixed mortgage rates as of August, a homebuyer can take out a mortgage loan of $516,500 to stay within a monthly payment of $2,500 – up from $483,250 in 2019 when rates were nearly a full percentage point higher than they are now. Meanwhile, the monthly payment on a home purchase of $483,250 has dropped from $2,500 a year ago to $2,339 today.
Low mortgage rates are motivating more people to purchase a home and giving them the opportunity to spend more but this doesn’t necessarily mean they get more bang for their buck. Home prices have risen as much as eight percent in some markets over the last year.
Today, conforming no-point 30-year fixed mortgage rates are averaging 2.875 percent and 15-year rates are near 2.5 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.