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Home Buyers Can Afford More Home With Lower Rates

August 9, 2024

Fueled by the announcement of a weaker than expected monthly employment report, the average rate for a 30-year, fixed-rate mortgage dropped 22 basis points to 6.4% this week.

The 6.4% rate is the lowest seen since April 2023. In addition, rates for 15-year, fixed-rate loans fell to 5.89%.

While there are still two more monthly inflation reports to be released before the Federal Reserve's September meeting, hopes of a Federal Funds rate cut are being fueled by the recent news. Mike Fratantoni, chief economist for the Mortgage Bankers Association, described last week's rate drop as a sign that "the market is moving ahead of the Fed".

Compare this week's buyer options to those available earlier this year.  The difference is eye-opening. In April, buyers of a $400,000 home with a 20% down payment and a 30-year fixed mortgage would have monthly payments of about $2,240, not including insurance and property taxes. Today, that monthly payment would be about $2,000. More buyers now have an opportunity buy a home today than any time since last year.

If rates continue to fall, as expected by most economists, home prices will rise and the number of homes for sale will become limited.  

Deciding whether to buy a house now or wait depends a lot on where you want to call home. Regardless of national headlines, real estate is a local game and finding the right home at the right price is always a winner for a long term investment and peace of mind.