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Key Report Says Large Budget Homebuyers Are Losing Spending Power

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After years of a red-hot market and prices rising exponentially, real estate has seen increasing interest rates due to attempts to get inflation under control.

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Unsurprisingly, this has had significant knock-on effects for potential homebuyers who face higher mortgage rates.

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A report by Redfin found that a buyer with a budget of $2,500 can now afford a $400,000 house with current interest rates, compared to a property worth $517,000 a few months back.

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Let’s examine what this significant change means and whether it spells an upcoming market crash.

What the Redfin Report Found

The average mortgage rate for a 30-year fixed-rate mortgage is now just under 6%.

In contrast, average mortgage rates were hovering around the 3% mark in 2021 — quite the quick turnaround.

Since mortgage rates determine the size of monthly payments — and a buyer’s ability to afford a mortgage largely depends on whether monthly payments are within their budget — this is a huge blow to buyers.

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