Lately, mortgage rates have slid in a way we haven’t seen for almost a year — and that drop isn’t just good news on paper. It translates into real buying power for people thinking about purchasing a home. To understand what’s changing — and why it’s a big opportunity — let’s pull together what Homes.com and Keeping Current Matters are showing us.

What the Data Shows

According to Homes.com, the 30-year fixed-rate mortgage average dropped to 6.35% for the week ended Thursday — a decline of 15 basis points. That’s the sharpest weekly drop in nearly a year. Homes.com
The 15-year fixed rate also fell to about 5.50% over the same period. Homes.com
The drop came as certain economic reports came in softer than expected — for example, the producer price index came in below expectations, which eased pressure, though consumer price index (CPI) data showed some acceleration. Homes.com
This rate decline has already stirred up more activity among borrowers: both refinance and purchase demand are increasing. Homes.com noted that the market is seeing more interest now that rates are coming down. Homes.com+2Homes.com+2

How Rate Changes Impact Homebuying Power

From the Keeping Current Matters piece “How Mortgage Rate Changes Impact Your Homebuying Power”:

Even relatively small shifts in mortgage rates matter a lot. A change of 0.25% or 0.5% can affect what monthly payment you qualify for, which in turn changes what price home you can shop for. Keeping Current Matters
When rates drop, your monthly payment for a given loan amount goes down — meaning for the same payment budget, you can afford a larger home (“more house”) or reduce how much money goes to interest vs principal. Keeping Current Matters
Also, when rates drop, more buyers who’d been priced out may re-enter the market. Keeping Current Matters emphasizes that these rate drops expand the pool of buyers who can afford homes. Keeping Current Matters+1

Why the Current Drop Is More Than Just a Small Win

Putting the two together, here’s what the combination of recent rate decreases (Homes.com) plus the principles of how rates affect buying power (Keeping Current Matters) imply:

Monthly Payments Become More Manageable
At 6.35% instead of higher rates (say 7% or more), the monthly principal + interest on a given loan amount drops noticeably. That means less strain on your budget. If you were budgeting a certain monthly payment, you can now move up your price range somewhat, or put aside more for down payment, repairs, upgrades, etc.
You Can Borrow More House for the Same Payment
For example, with the same monthly payment budget, you might afford a more expensive home — or stay in a better neighborhood, or get better features — thanks to the lower interest. That’s exactly what Keeping Current Matters explains: a small rate drop gives you more home for your dollar.
More Buyers Become Qualified
Lower rates reduce how much interest you’ll pay over time, reducing total cost. That helps people who were previously stretched too thin. Those who were “priced out” when rates were higher may now find homes that fit in their budget. It increases demand and competition — which both buyers and sellers will notice.
More Opportunities for Refinancing or Upgrading
Homeowners with older, higher-interest mortgages may see benefit in refinancing. Those considering moving up (i.e. selling their current home and buying a more expensive one) may find that the rate difference eats less into their monthly payment, making the move more feasible. Keeping Current Matters points out this leverage of rate changes. Keeping Current Matters
Interest Versus Principal Allocation Improves
When interest rates are lower, more of your monthly payment goes toward principal rather than interest, especially in the early years of the mortgage. That means you build equity faster. Over time, that difference can be significant in both equity accumulation and in total cost paid. Keeping Current Matters emphasizes how this shift really impacts long-term affordability. Keeping Current Matters

Some Numbers to Make It Real

Let’s look at a hypothetical to make this concrete (these are illustrative but grounded in how rate differences work in practice):

Suppose you are considering a 30-year fixed mortgage, with a purchase price of $500,000, putting 10% down ($50,000), so you finance $450,000.
At 7.00% interest, that payment (just principal + interest, ignoring taxes/insurance) might be significantly higher than at 6.35%. The drop of ~0.65% can save hundreds of dollars monthly.
The extra savings monthly might let you afford a house that costs perhaps 5-10% more, depending on down payment and other costs — meaning you might be able to shop in a higher price tier.

What the chart/table show—at a glance
As rates **fall**, the same monthly budget stretches further—your **maximum price** rises meaningfully.
Example: moving from ~7.00% toward ~6.35% materially lifts the price you can target at each budget tier—illustrating the “more house for the same payment” principle from KCM, and why Homes.com’s recent rate drop is a big deal.

Also, Homes.com gives an example in another article about what a buyer would pay monthly on a $500,000 home with a 10% down payment, comparing 6.35% to 7% interest: the monthly payment difference could be around $194 more per month at 7% vs 6.35%, and over a full year that adds up. Homes.com

Caveats & What to Watch Out For

While this drop is great news, there are a few things you should keep in mind:

Rates are still elevated versus the historic lows during the pandemic. Even though 6.35% is a meaningful drop, it’s not 2-3%, so affordability still is a challenge.
Other costs matter: Down payment, property taxes, homeowners insurance, maintenance, closing costs — these can eat into your budget. Lower mortgage interest rate helps, but other costs don’t go down with rates.
Future rate changes and economic data matter: Inflation, employment data, Fed policy — all can move rates back up. If rates bounce back, the window of opportunity may narrow.
Inventory & competition: Even with more buyers re-entering, if inventory remains constrained in some areas (especially desirable neighborhoods), bidding wars can still happen. But dealing from a position of more rate advantage helps.

What This Means for You if You’re Thinking of Buying

Here are practical takeaways if you are a buyer now:

Get prequalified / preapproved so you know exactly what your payment will be at current rates — that helps you act quickly.
Use mortgage calculators to compare what your payment would be at, say, 7% vs 6.35% (or current rate) to see how much more house you can afford, or how much you can save.
If you see homes in your target area, consider locking a rate if you're confident current rates are favorable and expected to increase. Sometimes locking in can protect you if rates rise.
Work with a lender/agent who can help you understand the rate trends locally (because rates vary by market, credit score, down-payment size).
If you’re currently renting, or have been waiting, this might be the moment to step in — your payment might be more affordable than you expect once rates are factored in.

Bottom Line: Why Lower Rates = Stronger Homebuyer Power

Putting it all together:

The recent drop in the 30-year fixed rate to ~6.35% (from higher levels) is the biggest weekly drop in nearly a year. That’s real. Homes.com
That drop means lower monthly payments, more house for your money, better equity build in early years, and it expands the number of buyers who can afford homeownership. Keeping Current Matters reinforces that even small rate drops shift what households can qualify for. Keeping Current Matters
If you combine this with rising inventory of homes (homes.com notes more homes coming onto the market, sellers more willing), then buyers have more options. More choices + better rates = greater leverage.

If you’ve been holding off because rates felt high, it’s worth taking a fresh look. This kind of rate movement doesn’t always last forever, and the sooner you understand how it translates into what you can afford, the better positioned you’ll be.