If you’ve been holding off on buying because you were waiting for rates to come down, that shift is already happening. Mortgage rates recently crossed an important threshold and dipped into the 5% range for the first time in nearly three years.
Since then, rates have settled into the low 6% range. And according to expert forecasts, they are expected to stay around this level for much of the year.
That change may sound subtle on paper. In real life, it makes a meaningful difference for buyers.
Here’s why.
Why Today’s Rates Change the Math
Mortgage rates do more than determine how much interest you pay over time. They shape what you can afford, how competitive your offer can be, and whether buying feels realistic at all.
Just a year ago, rates were hovering near 7%. Monthly payments were higher. Budgets felt tighter. Many buyers felt priced out completely, especially first time buyers.
Now that rates have eased, affordability is starting to improve.
Borrowing costs are at their lowest point in almost 3 years. And that shift directly affects what type of home fits within your budget.
At 6% or below, buyers typically see:
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Lower monthly payments. On a $400,000 loan, payments are more than $300 less compared to when rates were closer to 7%.
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Increased buying power. That extra breathing room can open the door to better locations, larger homes, or fewer compromises.
For many buyers, this feels like a completely different market compared to just a year ago.
This Change Brings 550,000 Buyers Back Into Play
The impact of lower rates goes beyond individual budgets. According to research from the National Association of Realtors (NAR), when mortgage rates sit around current levels:
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5.5 million more households can afford the median priced home
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About 550,000 of those households are expected to purchase within the next 12 to 18 months
That is not guesswork. That is pent up demand starting to re enter the market.
Buyers who act before that wave fully returns may face less competition than those who wait until lower rates become common knowledge.
Even if rates stay in the low 6s or move back into the high 5s, the biggest shift has already happened. The difference between 7% and 6% has a far greater impact than many people realize.
A Quick Reality Check
Mortgage rates are only one piece of the puzzle.
Home prices, local inventory, property taxes, insurance costs, and your personal finances all still matter. And not every home will make sense at today’s rates.
That is why getting pre approved and reviewing your numbers with a trusted lender is essential.
Still, this rate environment brings more buyers back into the market than we have seen in years. If buying did not work for you before, it may be worth running the numbers again.
Bottom Line
Mortgage rates hitting a three year low is more than a headline. For many buyers, it is the difference between waiting on the sidelines and finally moving forward.
If you have been looking for a reason to revisit your options and see what is possible today, this is it. Let’s take a closer look at what current rates mean for your budget and your buying power.
The information and opinions in this article are not investment advice. Tim Stice makes no guarantees about accuracy or completeness. Always do your own research and consult a professional before making financial decisions. Tim Stice is not liable for any loss or damage resulting from reliance on this content.
Tim Stice, Broker Realtor | Hawaii Life | Maui, Hawaii | Real Estate Agent
