Homebuyers Just Gained $25K in Purchasing Power—Here’s Why

Increased home buying power

If you’re a hopeful homebuyer who’s been ghosting Zillow out of heartbreak, it’s time to reopen the app.

Earlier this month, President Trump announced new tariffs on foreign goods, and Wall Street did what Wall Street does: it panicked. Investors fled to the safety of Treasury bonds, yields plunged, and—like economic dominoes—mortgage rates followed suit. Combined with growing market uncertainty and cooling inflation data, it was enough to send rates on a downslope.

Now, mortgage rates are the lowest they’ve been in half a year. And in practical terms, that just made the average buyer $25,000 richer—at least when it comes to what they can afford to buy.

The math behind the mayhem

Let’s break it down.

At the start of the year, rates were sitting above 7.25%. If you had about $3,000 a month to spend on housing, that put your max budget around $433,750. Not bad, but maybe not enough for the home you really wanted.

Today? With rates now hovering near 6.55%—a level not seen since October 2024—that same monthly payment stretches to a $458,750 home. That’s a $25,000 increase in purchasing power, without changing your income, credit score, or lifestyle.

First-time buyers: You’re the real winners here

This rate dip is good news for anyone shopping for a home—but if you’re a first-time buyer, it’s a total game-changer.

According to the National Association of Realtors, 75% of younger millennials are first-time buyers, and nearly half of older millennials are, too. Most are putting down just 8–10% and financing the rest.

In that kind of scenario, interest rates do a lot of heavy lifting. Every percentage point shaved off the rate makes a meaningful difference in what you can afford—or whether you can afford to buy at all.

With student loans, rising rents, and sky-high home prices, most of these buyers have felt stuck between a rock and an unaffordable mortgage. But now, they’ve suddenly got options—and optimism.

A surprise plot twist in the market

Here’s what makes this moment so interesting: it wasn’t sparked by anything inside the housing market. Inventory (while improving) is still tight, and prices haven’t dropped. But broader economic jitters have pushed mortgage rates lower.

The recent tariff announcements rattled markets, driving investors toward safer assets like Treasury bonds. That drop in yields helped pull mortgage rates down. Add in lingering recession fears and speculation about future Fed rate cuts, and you’ve got the recipe for a meaningful, if possibly short-lived, dip in borrowing costs.

So while you’re paying more for electronics and imported goods, you could also end up paying less over 30 years for your mortgage. That trade-off could be enough to push buyers over the affordability barrier.

Still not easy—just easier

Let’s be real: affordability is still tough. Prices haven’t come down. Sellers aren’t exactly slashing listing prices. And in some markets, a $25,000 boost might not even get you a second bathroom.

But that doesn’t mean this moment should be ignored.

Because mortgage rates just blinked. In a market where every dollar counts, this kind of rate-driven tailwind could be the difference between renting and owning, between almost and finally.

So if you’ve been watching from the sidelines, waiting for a sign—this might be it. Maybe it’s time to reach out to a lender for a pre-approval, or finally tour that house that was just out of reach.