The housing market has seen a significant drop in mortgage rates – which can be great help for soon-to-be buyers.
While low mortgage rates are fantastic, it’s important to understand how even the slightest change can alter someone’s ability to purchase.
The National Association of Home Builders recently offered various scenarios of the price differences in affordability with interest rates. Currently, the median new-home price is $345,908. The buyer would receive a standard mortgage interest rate of around 3.75% (as of the beginning of February 2020) – if this rate moves up even just a quarter of a percentage point, it prices about 1.3 million U.S. homes out of the market. This was also factored in with a 10% down payment.
The NAHB also showed this process in reverse – with the recent change in lower mortgage rates, 44 million households can afford the median-priced new home.
Check out The NAHB’s chart below to view differences that interest rate fluctuations can make:
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