Home purchasing power increases as 30 year mortgage rates stay low

Since January of last year, mortgage rates for conventional 30-year loans have dropped 0.75 percent. Averaging just 3.73 percent this week according to Freddie Mac, interest rates are nearing their lowest levels of all time. These ultra-low rates mean that home purchasing power is increased, which is good news for those looking to purchase a home.

Experts at The Mortgage Reports posed the commonly asked question “how much home can I afford?” Home values have risen approximately 4 percent nationwide over the last year, but the 0.75 percent rate change means your average buyer now has 10 percent more purchasing power.

For example, a $400,000 house in January 2014 would now be selling for around $416,000. With today’s mortgage rates, a buyer could purchase a $440,000 home with no change in payments compared to the $400,000 home last year. The lower mortgage rates get, the more home buyers can afford.

Lenders have also been made it easier to get approved for a home loan, as more mortgages are getting approved than any other time this decade according to The Mortgage Reports. Low down payment mortgages are becoming increasingly popular, especially with the new Conventional 97 loan available via Fannie Mae.

The Conventional 97 allows home buyers to put just 3 percent down payment at closing, which is even lower than the FHA loan minimum of 3.5 percent. If you are considering purchasing a new home, now is the time to act, especially considering 30 year mortgage rates at loanDepot are so low.