A recent decline in mortgage rates, dropping to their lowest point in 10 months, has provided a window of opportunity for homebuyers, according to a new report from Redfin, the real estate brokerage. The average daily mortgage rate fell to 6.57% on Aug. 4, a significant drop from the recent peak of 7.08% in May.
This shift has increased the purchasing power for those in the market. A buyer with a monthly budget of $3,000 can now afford a home priced at roughly $458,750, a gain of about $20,000 since May. Put another way, the monthly payment on a median-priced US home of $447,000 would be about $2,862 with the new rate, which is over $100 less than the $2,983 it would have been in mid-May.
The drop in rates followed a weaker-than-expected July jobs report, which showed the US economy added fewer jobs than anticipated and the unemployment rate edged up. This development increased market expectations that the Federal Reserve may cut interest rates in September.