The drop in mortgage interest rates fueled by coronavirus fears has given home buyers a big boost in purchasing power in recent weeks, according to an analysis from Redfin, out Thursday.
At a mortgage interest rate of 3.2%, a home buyer with a $2,500 monthly mortgage budget could afford a home that is $51,250 more than in March of 2019 when rates were 4.4%. Put another way, a buyer who could accord a $457,000 home in March of last year could afford a $508,000 home today.
“Potential home buyers now have an extra incentive to buy a home despite all of the economic uncertainty from the coronavirus,” said Redfin chief economist Daryl Fairweather. “And, many current homeowners now have the option to refinance their mortgages and gain some extra spending cash each month. Low interest rates won’t help with direct impacts of the coronavirus on the economy like declines in tourism and service sector spending, but they will mitigate impacts to housing.”