If you’ve been sitting on the sidelines waiting for mortgage rates to come down before you make a move, I have good news for you: they already have.
For the first time in about three years, rates recently dipped into the top of the 5% range before settling into the low 6s. That may not sound dramatic at first glance, but in real life – where budgets, monthly payments, and buying power matter – this is a meaningful shift.
And it’s one that a lot of buyers haven’t fully realized yet.
Why This Rate Change Is More Important Than It Sounds
A mortgage rate isn’t just a number you glance at on a headline. It directly shapes what you can afford, how comfortable your payment feels, and whether buying a home is realistic for you at all.
Just a year ago, rates hovering around 7% put a lot of buyers in a tough spot. Monthly payments jumped. Affordability tightened. First-time buyers especially felt squeezed out of the market.
Now, with rates sitting in the low 6% range – and occasionally dipping into the high 5s for well-qualified buyers – the math starts to look very different.
For example, on a $400,000 loan, the difference between 7% and 6% can mean over $300 less per month. That’s real breathing room in your budget.
That breathing room can translate into:
- A stronger offer
- A different neighborhood
- A home with more of your “must-haves”
- Or simply a payment that feels more comfortable long term
That’s a big change from where we were not long ago.
This Shift Is Bringing Buyers Back Into the Market
The National Association of Realtors has tracked what happens when rates move into this range. Their research shows that when rates sit at 6% or below:
- 5.5 million more households can afford a median-priced home
- About 550,000 of those households are expected to buy within the next 12 to 18 months
That’s not theory. That’s pent-up demand from people who were priced out when rates were higher and are now quietly realizing that buying might be possible again.
And here’s the part most people miss: the difference between 6.2% and 5.8% isn’t nearly as impactful as the difference between 7% and 6%. The major affordability jump has already happened.
But Rates Aren’t the Only Piece of the Puzzle
Mortgage rates don’t exist in isolation. Home prices, inventory, property taxes, insurance costs, and your personal financial picture still play a big role in what makes sense for you.
A rate in the low 6s doesn’t mean every home suddenly works for every buyer. That’s why getting pre-approved and running real numbers with a trusted lender is still one of the most important first steps you can take.
But what this rate environment does mean is that buying may work for you now in a way it simply didn’t a year ago.
The Opportunity Most Buyers Haven’t Noticed Yet
Right now, we’re in a window where affordability has improved, but not everyone has reacted to it yet. That creates an interesting moment for buyers who are paying attention.
As more people realize that the math has changed, more buyers will come back into the market. Competition will pick up. Options may feel tighter.
If you’ve been waiting for a reason to revisit your numbers and see what’s possible, this is a smart time to do exactly that.
Bottom Line
Mortgage rates hitting a three-year low isn’t just a headline. For many buyers, it’s the difference between watching the market and participating in it.
If buying didn’t make sense for you before, it’s worth taking another look now. A quick conversation with a lender could show you that your options today look very different than they did just months ago.
And that could be the moment that turns “maybe someday” into “let’s start looking.”
FAQs
Are mortgage rates really at a 3-year low?
Yes. Rates recently dipped into the 5% range for the first time in about three years before settling into the low 6s. That shift has a meaningful impact on affordability compared to when rates were near 7%.
Why does a 1% rate change matter so much?
On a $400,000 loan, the difference between 7% and 6% can mean more than $300 per month in savings. That extra room in your budget can change what home, neighborhood, or price point feels comfortable.
Does this mean now is the perfect time for everyone to buy?
Not necessarily. Mortgage rates are only one part of the equation. Home prices, property taxes, insurance, inventory, and your personal finances still determine what makes sense for you.
How does this affect first-time homebuyers?
First-time buyers felt the biggest squeeze when rates were higher. Lower rates improve affordability and may make homeownership possible again for buyers who were previously priced out.
Will more buyers enter the market because of this?
Yes. Research from the National Association of Realtors shows that when rates are at or below 6%, millions more households can afford a home, and hundreds of thousands are expected to buy within the next 12–18 months.
Should I wait to see if rates drop back into the 5s?
The difference between high 5% rates and low 6% rates is much smaller than the jump from 7% to 6%. The biggest affordability shift has already happened.
What should I do before I start looking at homes?
Get pre-approved with a trusted lender. Running real numbers based on your financial picture will show you exactly what these rates mean for your budget and buying power.