INDIANAPOLIS— For the first time in more than three years, mortgage rates have fallen below 6%.
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“My magic number I’ve said for a couple years was 5.99,” said Dan O’Brien, a Realtor with Trueblood Real Estate.
O’Brien said that threshold could prompt homeowners who locked in lower interest rates to consider selling.
“It’s just that mental aspect of, ‘Oh, I don’t want to trade it for a 6%,’” O’Brien said. “But now that we’re under, I think it will open up the thought of, ‘I’ll consider selling again.’”
For the past three and a half years, mortgage rates have hovered between 6% and 8%. According to Federal Home Loan Mortgage Corporation, the last time the average 30-year mortgage rate dipped below 6% was the week of Sept. 8, 2022.
“A lower interest rate means more affordability, and that’s what we’re ultimately looking for in terms of the buyer’s power to purchase a home,” O’Brien said.
To show the impact, we ran the numbers.
In January, the average sale price of a home in central Indiana was $300,000. With 5% down, a 30-year mortgage on $285,000 at 8% interest would cost about $2,466 per month. At 7%, the monthly payment drops by more than $200 to $2,271. At 6%, it falls further to $2,083.
Those figures do not include taxes, mortgage insurance or homeowners insurance.
“It makes it much more palatable to buy a house in these lower interest rates when they’re coming from such a large percentage of the population having a lower interest,” O’Brien said.
He expects the market to pick up this year.
“It’s one of those where sellers are able to get a really good price for a house, but buyers are now able to negotiate a little more, which had gone by the wayside in the early 2020s,” O’Brien said.
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