How Interest Rates Affect How Much House You Can Afford

Real Estate Agent with Search Homes for Sale in Maryland at

Prices on homes can change in affordability when interest rates change. Look at this graph:

How Interest Rates Affect Affordability

This is a graph of how much house you could have bought in any week over the past two years with the payment that would buy a $100k house at the start of the graph. Interest rates first went up, so the same payment bought less house. But current rates are down. You can buy a $107k house for the same payment. There is talk of interest rates dipping to 4.5%. If that happens, that same payment can buy over $120k value of house. All this, and prices have not stayed the same. Prices in most areas have dropped. Some people are waiting to find a bottom in house prices before purchasing. This only looks at one factor though. If you take interest rates into account, which directly affects how much payment a buyer can afford, then effective prices are very low right now. Even if actual prices drop a little more, interest rates going up will make the effective price higher.

Take advantage of these low interest rates and start shopping for a home. Start your search at We provide the best tools for shopping for homes. The listing details for instance will show you the days on market, and the price history for that home. You can even search by price drop or days on market if you wish. Our MLS home listings search is something I am quite proud of.

As always let us know if we can help you with any of your real estate needs.

Comments (3)

Keith Landis
Keystone Home Finance - NMLS#834342 - Conventional - FHA - VA -USDA - Jumbo Programs - Direct Phone 412-726-1654 - Pittsburgh, PA
Pennsylvania - "Your Pennsylvania Mortgage Source"

There is talk of interest rates dipping to 4.5%

As we all know now that talk came true.  Never a better time to buy.

Aug 05, 2010 12:38 AM
Peter Baumbach
Search Homes for Sale in Maryland at - Owings Mills, MD

Yes, it is amazing. I have a buyer getting 4.25% and better than zero points. They are getting a quarter point (0.25%) credit rebated to them.

Aug 14, 2010 07:58 AM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Rates remain low !  Pls. view our RELO message -

Jul 29, 2014 08:41 PM