Renters have more homebuying power as rates remain near all-time lows

Renters have more homebuying power as rates remain near all-time lows

Renters have more homebuying power as rates remain near all-time lows
Demand for homes is off the charts. Record low mortgage rates throughout much of 2020 coupled with millennials reaching prime home buying age has created an influx of renters looking to transition to homeownership. According to a report from First American, this demand has made it more difficult for first-timers to break in to the housing market.

“The nearly two-thirds of Americans who already own a home saw their equity increase, while potential first-time homebuyers, who are nearly always renters, missed out,” said First American Chief Economist Odeta Kushi who authored the report. “While low mortgage rates increase house-buying power and thus improve affordability for potential first-time buyers, low rates also boost demand and, in a supply restricted market, accelerate house price appreciation, which in turn reduces affordability.”

The share of homes for sale that a median renter could afford decreased from 61 percent a year ago to 57 percent today. Mortgage rates have ticked up in recent week which could further hinder affordability.

Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 3.0 percent and 15-year rates are near 2.25 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.