What Lower Mortgage Rates Mean for Your Purchasing Power

<article class="post-901781 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-901781"><span class="entry-date">January 8, 2024</span><div class="entry-header center-block text-center"><h1 class="entry-title">What Lower Mortgage Rates Mean for Your Purchasing Power</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=What+Lower+Mortgage+Rates+Mean+for+Your+Purchasing+Power&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fwhat-lower-mortgage-rates-mean-for-your-purchasing-power%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="What Lower Mortgage Rates Mean for Your Purchasing Power Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20240108-What-Lower-Mortgage-Rates-Mean-for-Your-Purchasing-Power.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>If you want to <a href="https://www.simplifyingthemarket.com/2023/11/23/why-homeowners-are-thankful-they-own/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">buy a home</a>, it’s important to know how <a href="https://www.simplifyingthemarket.com/2023/12/20/why-mortgage-rates-could-continue-to-decline/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">mortgage rates</a> impact what you can afford and how much you’ll pay each month. Fortunately, rates for 30-year fixed mortgages have come down significantly since the end of October and are currently under <a href="https://freddiemac.gcs-web.com/node/28216/pdf" rel="noopener noreferrer" target="_blank">7%</a>, according to <em>Freddie Mac</em> (<em>see graph below</em>):</p>
<p> <a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240104/20240108-Mortgage-Rates-Fall-Below-Seven-Percent.png" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240104/20240108-Mortgage-Rates-Fall-Below-Seven-Percent.png"/></a></p>
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<p>This recent trend is great news for <a href="https://www.simplifyingthemarket.com/2023/12/15/what-you-need-to-know-about-down-payments-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">buyers</a>. As a recent article from <em>Bankrate</em> <a href="https://www.bankrate.com/mortgages/analysis/" rel="noopener noreferrer" target="_blank">says</a>:</p>
<blockquote><p><em>“The rate cool-off somewhat eases the housing affordability squeeze.”</em></p></blockquote>
<p>And <a href="https://www.mba.org/news-and-research/newsroom/news/2023/12/21/mortgage-application-payments-increased-2.0-percent-to-2-199-in-october" rel="noopener noreferrer" target="_blank">according</a> to Edward Seiler, AVP of Housing Economics and Executive Director of the Research Institute for Housing America at the <em>Mortgage Bankers Association</em> (MBA):</p>
<blockquote><p><em>“MBA expects that affordability conditions will continue to improve as mortgage rates decline . . .”</em></p></blockquote>
<p>Here’s a bit more context on how this could help with your plans to <a href="https://www.simplifyingthemarket.com/2023/12/12/down-payment-assistance-programs-can-help-pave-the-way-to-homeownership/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">buy a home</a>.</p>
<h4><strong>How Mortgage Rates Affect Your Search for a Home</strong></h4>
<p>Understanding the connection between mortgage rates and your monthly home payment is crucial for your plans to <a href="https://www.simplifyingthemarket.com/2023/12/11/the-perfect-home-could-be-the-one-you-perfect-after-buying/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">become a homeowner</a>. The chart below illustrates how your ability to afford a home changes when mortgage rates shift. Imagine your budget allows for a monthly payment between $2,400 and $2,500. The green part in the chart shows payments in that range or lower (<em>see chart below</em>):</p>
<p> <a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240104/20240108-Buyers-Purchasing-Power.png" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240104/20240108-Buyers-Purchasing-Power.png"/></a></p>
<p></p>
<p>As you can see, even small changes in rates can affect your budget and the loan amount you can afford.</p>
<h4><strong>Get Help from Reliable Experts To Understand Your Budget and Plan Ahead</strong></h4>
<p>When you’re looking to <a href="https://www.simplifyingthemarket.com/2023/11/30/is-owning-a-home-still-the-american-dream-for-younger-buyers/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">buy a home</a>, it’s important to get guidance from a local real estate agent and a trusted lender. They can help you explore different mortgage options, understand what makes mortgage rates go up or down, and how those changes impact you.</p>
<p>By looking at the numbers and the latest data together, then adjusting your strategy based on today’s rates, you’ll be better prepared and ready to buy a home.</p>
<h3>Bottom Line</h3>
<p>If you’re looking to <a href="https://www.simplifyingthemarket.com/2023/11/24/why-homeowners-feel-thankful-for-their-homes-infographic/" rel="noopener noreferrer" target="_blank">buy a home</a>, you should know the recent downward trend in mortgage rates is good news for your move. Team up with a trusted <a href="https://www.simplifyingthemarket.com/2023/12/07/why-you-need-to-use-a-real-estate-agent-when-you-buy-a-home/" rel="noopener noreferrer" target="_blank">real estate agent</a> and lender to plan your next steps. </p>
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