It may seem like mortgage rates have been vacillating in a tight range, brushing up against 4 percent on the 30-year fixed and then falling back. Rates, however, are still considerably lower than they were a year ago.
That translates into far more buying power for the average consumer, heading into the busiest housing season of the year. But how much more?
John Burns Real Estate Consulting looked at the typical American family, earning $60,000 a year. They can afford about $1,800 a month for the mortgage payment, given a normal amount of other debt. For a 30-year fixed-rate loan, back in 2000, when rates were 8 percent, that would have qualified them for a $245,000 loan. At 4 percent, which is where rates are headed today, they can qualify for a $377,000 loan.