Lower Mortgage Rates Hike Affordability

The big story in real estate this year — besides tightening inventory and rising prices in several market segments — is the effect (still) dropping mortgage rates are having on Buyers’ purchasing over.

So, when 30-year rates were over 4% — what, six months ago? — a Buyer who could shoulder a $1,200 monthly payment could afford a $275,000 house (assuming that they were putting 10% down).

Today, with 30-year rates on conventional mortgages well under 3.5%, that same $1,200 monthly payment lets a Buyer afford a $300,000 house.

No wonder that Sellers of such homes — especially ones in nice locations and in great condition — are doing so well this year.

P.S.:  Of course, Buyers who still want to buy a $275,000 house can simply elect to pocket the savings (just under $200 per month).

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

Leave a Reply