Mortgage Rates Driven to Historic Lows by the Coronavirus Amp Up Homebuyer Purchasing Power

Homebuyers in Dallas and Portland, Oregon saw an increase in the share of homes affordable, while those in Phoenix and Las Vegas saw a decrease.

A dramatic drop in mortgage interest rates, driven by coronavirus fears, has given homebuyers a big boost in purchasing power in recent weeks. At the current mortgage interest rate of 3.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06}, a homebuyer with a $2,500 monthly mortgage budget could afford to purchase a home priced $51,250 higher than in March of 2019 when rates were 4.4{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06}. Put another way, as a result of the drop in mortgage interest rates, the monthly payment on a $457,000 home has dropped from $2,500 a year ago to $2,250 today; and a homeowner who could afford a $457,000 home in March of 2019 could afford one at $508,250 today. Although most of the broad economic consequences of the coronavirus, or COVID-19, have been negative, these historically low rates may at least offer some positive news.

“Potential homebuyers now have an extra incentive to buy a home despite all of the economic uncertainty from the coronavirus,” said Redfin chief economist Daryl Fairweather. “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.”

The interactive mortgage rates chart below shows how much you could afford to spend on a home at different mortgage interest rates, with each line representing a different monthly payment. You can view or download a static version of this chart here.

The boost in purchasing power comes at a welcome time for homebuyers who have been facing major inventory crunches and intense bidding wars in many markets. Despite there being fewer homes for sale in most markets this year, the share of homes for sale that were affordable on a $2,500 monthly payment increased 1.9 percentage points nationally, from 68.6{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} between March 4 and March 10, 2019 to 70.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} between March 2 and 8, 2020.

The markets where homebuyers are experiencing the biggest boost in affordable inventory compared to a year ago were Dallas (+6.2 points), Portland, OR (+5.2 points), and Richmond, VA (+4.3 points).

“I just had a buyer who was at the top of his budget lock in a 2.99{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} mortgage rate and he is ecstatic at how much more flexibility his finances will have thanks to the interest rate drop,” said Portland Redfin agent Meme Loggins. “Another one of my buyers was looking at condos just a few weeks ago because he didn’t think he could afford a single family home, but thanks to the low rates he can now. Homebuyers in every price range are excited, even those looking at homes priced well over $1 million. Unfortunately we are still facing competition on every offer, which leads us to drop contingencies and offer above list price. With the inventory crunch, these low rates are definitely adding to the frenzy.”

Even with the drop in mortgage rates, some markets still saw a decline in the share of homes affordable. The share of affordable inventory on a $2,500 payment fell 3.6 points in Phoenix, 3.4 points in Las Vegas and 1 point in Orlando.

Share of Homes for Sale Affordable on a $2,500 Monthly Payment

Metro Area Total Homes for Sale, March 4-10, 2019 Total Homes for Sale, March 2-8, 2020 Share of Homes Affordable on a $2,500 Payment, 2019 Share of Homes Affordable on a $2,500 Payment, 2020 Change in Share of Homes Affordable, 2019 to 2020
Dallas, TX 18,195 15,597 69.6{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 75.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 6.2 pts
Portland, OR 6,335 4,835 49.9{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 55.1{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 5.2 pts
Richmond, VA 3,244 2,515 76.6{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 80.9{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 4.3 pts
Milwaukee, WI 4,397 4,276 80.6{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 84.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 4.2 pts
San Diego, CA 7,576 4,889 19.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 23.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 4.0 pts
Nashville, TN 11,083 9,983 72.4{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 76.1{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 3.7 pts
Minneapolis, MN 8,838 8,214 69.6{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 73.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 3.6 pts
New York, NY 35,344 33,128 26.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 29.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 3.5 pts
Columbus, OH 5,563 5,206 82.0{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 85.4{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 3.4 pts
Seattle, WA 6,125 3,841 23.1{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 26.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 3.1 pts
Raleigh, NC 6,742 5,921 74.9{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 78.1{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 3.1 pts
Louisville, KY 3,057 2,756 84.0{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 86.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.9 pts
Chicago, IL 27,981 24,325 71.6{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 74.4{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.8 pts
Denver, CO 7,206 5,498 44.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 47.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.8 pts
Charlotte, NC 11,513 10,019 77.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 80.0{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.8 pts
Miami, FL 20,443 16,650 55.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 58.4{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.7 pts
Birmingham, AL 4,751 3,991 84.3{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 87.0{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.7 pts
Houston, TX 28,013 26,255 77.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 80.0{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.5 pts
Jacksonville, FL 8,891 7,259 79.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 81.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.5 pts
Austin, TX 7,426 5,684 69.1{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 71.4{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.3 pts
Hartford, CT 4,882 4,558 86.6{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 88.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.2 pts
Providence, RI 5,296 4,433 73.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 75.9{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.2 pts
Riverside, CA 18,185 13,082 62.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 64.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.2 pts
Atlanta, GA 26,234 22,649 76.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 78.6{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.1 pts
San Jose, CA 2,325 1,595 2.3{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 4.3{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.0 pts
Kansas City, MO 6,870 4,918 80.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 82.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 2.0 pts
Baltimore, MD 10,200 8,640 75.4{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 77.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 1.8 pts
Sacramento, CA 5,060 4,008 49.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 51.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 1.7 pts
New Orleans, LA 4,264 4,036 79.9{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 81.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 1.6 pts
San Antonio, TX 9,638 8,671 84.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 86.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 1.6 pts
Boston, MA 7,884 7,504 34.0{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 35.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 1.5 pts
Virginia Beach, VA 6,871 5,201 85.3{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 86.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 1.4 pts
Detroit, MI 5,016 4,707 92.1{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 93.3{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 1.2 pts
Oklahoma City, OK 4,948 4,286 86.0{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 87.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 1.2 pts
St. Louis, MO 8,799 7,167 87.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 88.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 1.0 pts
Indianapolis, IN 5,361 4,125 83.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 84.1{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 0.9 pts
Buffalo, NY 1,986 1,585 90.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 91.0{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 0.9 pts
Cincinnati, OH 7,873 6,506 85.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 86.1{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 0.4 pts
Memphis, TN 2,950 2,447 86.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 86.4{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 0.2 pts
Pittsburgh, PA 8,374 7,802 88.0{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 87.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} -0.2 pts
San Francisco, CA 1,686 1,667 1.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 1.6{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} -0.3 pts
Tampa, FL 16,616 11,845 80.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 80.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} -0.3 pts
Cleveland, OH 7,960 5,883 89.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 89.2{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} -0.4 pts
Philadelphia, PA 7,033 6,231 81.4{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 80.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} -0.6 pts
Los Angeles, CA 19,772 13,949 19.9{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 19.3{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} -0.6 pts
Salt Lake City, UT 3,621 1,511 63.4{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 62.6{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} -0.8 pts
Washington, D.C. 13,321 11,059 55.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 54.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} -0.9 pts
Orlando, FL 11,562 8,634 79.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 78.7{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} -1.0 pts
Las Vegas, NV 12,057 8,143 80.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 77.4{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} -3.4 pts
Phoenix, AZ 24,664 15,339 71.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 67.8{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} -3.6 pts
National 883,656 738,139 68.6{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 70.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} 1.9 pts

Methodology

The home prices listed in the interactive chart and examples above are calculated based on the maximum loan a buyer could pay with the given monthly payments, assuming a 20{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} down payment plus property taxes (1.25{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} rate) and insurance (annual premium 0.5{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} of home value). HOA dues were not included in the calculations. For the March 2020 period, a mortgage rate of 3.20{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} was used. For the March 2019 period, a mortgage rate of 4.41{d872b83874cbc456d4e7e49f0ae218a6abf1c172c201c18bd21e1a6839859f06} was used.

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