Mortgage and Housing Affordability on the Rise!

Over the past 18 months, mortgage rates have quietly — but meaningfully — improved. While the headlines often focus on the highs and lows, the truth is this: rates are down about 1% from where they were just a year and a half ago… and that’s making a noticeable difference for homebuyers.

Let’s put some real numbers to it.

On a $300,000 loan, the monthly principal and interest payment at a 7.5% rate would be around $2,097. At 6.5%, that same loan drops to about $1,896 — roughly $200 less per month. That’s $2,400 per year in savings, simply from the change in rates.

Now, let’s flip it around and look at it another way…
If a buyer was comfortable with that $2,097 payment 18 months ago, today that same payment would buy a home priced about $30,000 higher — without increasing the monthly budget.

That’s what we call buying power — and when rates move, buying power moves right along with them.

The Affordability Equation

Even though home prices have continued to rise modestly, the decline in rates is helping to offset those increases. In other words, home affordability is improving, even in a market where prices remain strong.

Here’s the simple takeaway:

• Lower rates = lower payments
• Lower payments = higher purchasing power
• Higher purchasing power = improved affordability

It’s the kind of math that brings opportunity back to the table for buyers who may have felt priced out not that long ago.

Perspective Matters

It’s worth remembering that even with recent fluctuations, today’s mortgage rates are still well below long-term historical averages. Through the 1980s and early 1990s, for instance, rates ranged from 8% to 12% — yet people still bought homes, built equity, and created wealth through ownership.

The key difference today is that buyers have better tools, better guidance, and more flexible loan options. VA, FHA, USDA, and Fairway’s own Buy & Save programs give borrowers multiple ways to make homeownership fit their financial comfort zone.

Your Move Forward

If you’ve been waiting for a “better time,” this might be it. The combination of slightly lower rates and rising affordability could open doors — literally — for many buyers who stepped back during the higher-rate period.

Whether you’re a first-time buyer or returning homeowner, it’s a good moment to check in and re-run the numbers. You may find your purchasing power has improved more than you think.

The Bottom Line

Mortgage rates are down about 1% over the past 18 months.
That change alone means:

• Roughly $200 less per month on a $300,000 mortgage, or
• The ability to afford a home about $30,000 higher in price for the same monthly payment.

Even as home prices trend upward, affordability is quietly making a comeback — and that’s great news for buyers heading into the new year.

Ken Pederson, Your Lancaster Based Mortgage Expert

Ready to see how today’s lower rates could work in your favor?
Run the numbers with our team and discover your updated buying power.
Contact Fairway Home Mortgage today — and let’s make your next move happen.

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