Steep Mortgage Rates Stunt Home Buying Power

The high-rate environment of today’s housing market leaves potential homebuyers with less purchasing power than last year, study shows.

A young woman sits on the floor with moving boxes.
(Image credit: Getty Images)

Rising mortgage rates and inflationary pressures have hit the housing market substantially over the last year, leaving homebuyers with considerably less purchasing power than in 2022, a new report shows.

Although the Federal Reserve has paused its rate-hiking campaign, mortgage rates remain elevated. As of October 11, the average 30-year mortgage rate stands at 7.83%, according to Bankrate — near more than 22-year highs. A recent report from Redfin shows mortgage rates have climbed from 6.6% to 7.7% year over year. Mortgage rates directly impact the monthly housing payment new home buyers are responsible for. As such, budgets won’t stretch nearly as far as they did last year.

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Seychelle Thomas
Contributing Writer

Seychelle is a seasoned financial professional turned personal finance writer. She’s passionate about empowering people to make smart financial decisions by combining 10 years of finance industry experience with solid research and a wealth of knowledge. Seychelle is also a Nav-certified credit and lending expert who has explored money topics such as debt consolidation, budgeting, credit, and lending in her work for publications including GOBankingRates, LendEDU, and Credible.