Low mortgage rates make us property more affordable

Photo credit: Cyndie

Low mortgage rates are helping to make US property more affordable.

The latest index released by the National Association of Home Builders/Wells Fargo shows that nationwide affordability enjoyed a solid boost in the first quarter of 2015, fuelled by both low rates and home prices.

The national median home price declined from $215,000 in the fourth quarter to $210,000 in the first quarter. Meanwhile, average mortgage interest fell from 4.29 percent to 4.03 percent in the same period.

Mortgage credit availability increased in April according to the Mortgage Credit Availability Index (MCAI), a separate report from the Mortgage Bankers Association. The MBA also reports that mortgage applications for new home purchases increased by 0.3 per cent in April from the previous month.

In all, the NAHB says that two thirds of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $65,800. This is up from the 62.8 per cent of homes sold that were affordable to median-income earners in the fourth quarter.

"Consumers benefitted from continued low mortgage rates and some fall in the price of homes sold in the first quarter, as these conditions offer a great time to buy," says NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo.

"The past two quarters have seen an improvement in affordability as mortgage rates remain low," comments NAHB Chief Economist David Crowe. "Eighty-five per cent of the metropolitan areas measured experienced an increase in affordability. Along with favorable home prices and pent-up demand, this broad improvement should help encourage more buyers to enter the marketplace."