Impact of Dropping Mortgage Rates on Buying Power

The recent drop in mortgage interest rates has significant implications for home buyers, enhancing their purchasing power. For instance, a homeowner looking to buy with a $350,000 loan saw their monthly payment decrease from about $2,329 at a 7% rate to about $2,212 at a 6.5% rate, leading to savings of approximately $117 monthly. Furthermore, buyers with an income of $100,000 could see their borrowing capacity increase by nearly $12,000, raising their limits from about $276,000 to $288,000. This change creates more opportunities for buyers, allowing them to consider homes they may not have afforded previously due to higher rates.