How Mortgage Rate Changes Impact Your Homebuying Power

How Mortgage Rate Changes Impact Your Homebuying Power

If you’re thinking about buying or selling a home, mortgage rates are likely on your mind. That’s because mortgage rates directly impact how much you can afford in your monthly mortgage payment, and it’s crucial to factor that into your planning. Here’s what you need to know.

What’s Happening with Mortgage Rates?

Mortgage rates have been trending down recently, which is good news for your homebuying plans. However, it’s important to remember that rates can be unpredictable because they’re influenced by many factors.

The economy, job market, inflation, and decisions made by the Federal Reserve all play a role in shaping mortgage rates. So, even as rates decrease, they can still fluctuate based on new economic data. As Odeta Kushi, Deputy Chief Economist at First American, says:

“The ongoing deceleration in inflation, coupled with the Federal Reserve’s recent indication of potential rate cuts [in 2024], suggests an environment supportive of modest declines in mortgage rates. Barring any unforeseen circumstances and resurgence in inflation, lower mortgage rates could be on the horizon, but the journey towards them might be slow and bumpy.”

How Do These Changes Affect You?

When mortgage rates change, it directly impacts your monthly home loan payment. Even a small rate change can significantly affect your monthly bill.

The chart below illustrates how different mortgage rates influence your monthly house payment for various loan amounts. For example, if you can afford a monthly payment of $2,600, the green section in the chart highlights payments in that range or lower based on varying mortgage rates (see chart below):

Understanding how mortgage rates impact your payment empowers you to make better-informed decisions.

How Can You Keep Track of the Latest on Rates?

Real estate agents have the expertise to help you understand what’s happening in the market and what it means for you. They can provide tools and visuals, like the chart above, to illustrate how rate changes impact your buying power.

You don’t need to be a mortgage expert; you just need a professional by your side. Someone who can help you make sense of the market and guide you through your homebuying or selling journey.

Bottom Line

If you have questions about the housing market, let’s connect. This way, you’ll have a clear understanding of what’s happening and how to navigate it effectively.