TULSA, Okla. — Mortgage rates dip slightly, but remain high for prospective home buyers.
As more homes come on the market, prospective buyers face a challenging combination of high home prices and mortgage rates that remain stubbornly above 6%.
Interest rates on mortgages are tipping down just a touch, but not enough to make a significant difference in monthly mortgage payments for many prospective home buyers.
"The houses that were $200,000 6 years ago are $400,000 now," said Jeff Ostrowski from Bankrate.
This double dilemma of higher home prices and elevated mortgage rates is creating affordability challenges for many Americans looking to purchase a home.
"You need $116,000 to $117,000 in income to afford the median priced home in the US, but most buyers are still couples, and many of those couples have two incomes. So it's not like as a single person you need to be making $100,000, but if, you know, yeah, so I mean you could, if you've got two teachers making $60,000 apiece, you, you can get there," Ostrowski said.
According to recent data, mortgage rates remain significantly higher than they were just a few years ago.
"According to Bankrate's most recent survey, the average 30 year mortgage rate was 6.72%, and so that's been down a bit, but yes, it has been close to 7% for most of the year," Ostrowski said.
That's more than double the mortgage interest rates buyers enjoyed in the recent past.
"Oh yeah, 3% mortgage rates. That was so awesome. The reason we had those awesome mortgage rates was because the world was collapsing. I mean, we were in a global lockdown. The Federal Reserve was forced to slash rates to zero, and that's why mortgage rates were so low," Ostrowski said.
The current economic environment makes a return to ultra-low rates unlikely in the near term.
"And now that the economy is doing well, that the, the job market is is strong, uh hiring is still pretty strong. mortgage rates are at a more normal level, but everyone says, why can't mortgage rates just go back to where they were a couple of years ago? And the reality is we don't really want that because that would mean something else had gone horribly wrong," Ostrowski said.
Since rates aren't likely to drop significantly, home buyers need to consider alternative affordability strategies.
"There's nothing wrong with putting 10% down, 5% down. Um, if you're a veteran, you can get a VA loan with 0% down," Ostrowski said.
The trade-off for smaller down payments typically involves higher fees at closing, but even those total less than coming up with the traditional 20% down payment in cash.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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