Homebuyers finally got some relief as 30-year fixed mortgage rates dropped significantly last week.
After steadily climbing for most of the year, rates slid from 7.86% to 7.61% — the largest one-week decline in over a year — according to the Mortgage Bankers Association.
The decline follows recent signs that the economy is cooling, with a weaker-than-expected jobs report and an uptick in unemployment. Lenders tend to lower mortgage rates when there’s a sign of an economic slowdown or recession.
With mortgage rates dropping, monthly homeownership costs will become more affordable. However, home prices have risen by 30% since 2020, which has squeezed out many buyers.
Despite a brief dip in early 2023, the median U.S. home price has risen to $431,000, per the latest U.S. Census Bureau data.
Assuming that you can afford a 20% down payment on a $431,000 home, the monthly payments for a 30-year fixed mortgage with a 7.61% rate work out to $2,437.
See whether you can afford a home based on current rates
If you’re a potential homebuyer, you can use CNBC Make It’s mortgage calculator to figure out how much your monthly mortgage payments would be based on the prevailing interest rate.
Just remember that the calculator doesn’t include additional expenses like insurance, property taxes and private mortgage insurance, which is typically required for mortgages with less than a 20% down payment.