Record low mortgage rates are drawing a new wave of first-time homebuyers to the market, Freddie Mac reports. “In August, activity among first-time homebuyers rose 19% from July to the highest monthly level ever for Freddie Mac,” says the mortgage giant’s Chief Economist Sam Khater, adding that the rebound “has come at a critical time for the economy.”
Since the beginning of the year, mortgage rates have dropped more than 80 basis points, the National Association of REALTORS® reports. As such, the qualifying income to buy a starter home has dropped by 10% to nearly $43,000. Further, the monthly mortgage payment dropped by $100.
The lower borrowing costs are prompting homebuying activity to move higher than pre-pandemic levels, NAR notes. More homebuyers may be able to jump into the housing market, with one in three renters able to afford to buy the typical home today, NAR reports.
Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 17:
30-year fixed-rate mortgages: averaged 2.87%, with an average 0.8 point, rising slightly from last week’s all-time low of 2.86%. Last year at this time, 30-year rates averaged 3.73%.
15-year fixed-rate mortgages: averaged 2.35%, with an average 0.8 point, falling from last week’s 2.37% average. A year ago, 15-year rates averaged 3.21%.
5-year hybrid adjustable-rate mortgages: averaged 2.96%, with an average 0.3 point, dropping from last week’s 3.11% average. Last year at this time, 5-year ARMs averaged 3.49%.
Freddie Mac reports average commitment rates, along with average fees and points, to reflect the total upfront cost of obtaining a mortgage.
Source: REALTOR® Magazine