Why have falling mortgage rates failed to make a major dent in the homebuying slump?

Yes, rates are down. The latest reading – a 6.17% average for a 30-year fixed-rate loan, according to Freddie Mac – is the lowest in a year.

However, a budget-conscious house hunter must consider mortgage rates in relation to the true homebuying cost: monthly payments. My trusty spreadsheet reviewed Freddie Mac’s 55-year history of mortgage rates, focusing on how much rates alone can swing financing costs.

The latest 6.17% rate translates to a monthly house payment of $6.11 for every $1,000 borrowed. For example, that’s $3,055 monthly if you’re borrowing $500,000 or $6,110 if it’s a $1 million loan. And we’re just talking about repaying the loan – not taxes, insurance or association fees.

Now, if you

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