As Mortgage Rates Rise, Buyers Lose Purchasing Power
A buyer earning $3,000 per month can now only afford a $442,500 home, while one year ago, that same buyer could afford a $475,750 home
Oct. 30, 2024
Image: Felix Mizioznikov / stock.adobe.com
Rising mortgage rates are making homes less affordable.
The recent increase in mortgage rates is affecting homebuyer purchasing power. The 30-year fixed-rate mortgage is now at 7%, which means someone with a $3,000 monthly budget can afford a $442,500 home. This is down from $475,750 just one year ago when rates were 6.11%, National Mortgage Professional reports, citing recent data from real estate marketing platform Redfin. However, rates are constantly shifting and affordability is still better than it was several months ago. For example, that same buyer now has $17,000 more in purchasing power than in April, when rates hit 7.5%.
The recent uptick in mortgage rates is disappointing news for buyers who missed out on a brief window of time when rates were much closer to 6% than 7%. The national median home price is $428,000, and Redfin estimates that monthly payment with a 7% rate would be $2,895, which is $200 higher than the monthly payment with a 6.11% rate.
