Excluding insurance and taxes, the approximate monthly mortgage payment on a $400,000 home purchase with a 20% downpayment generating interest at a rate of 6.58% is $2,039. That monthly payment drops by $67 to $1,972 at a 6.26% rate, and decreases by $100 to $1,939 at 6.1%.
Recent analyses from various mortgage and real estate data firms have noted that tumbling mortgage rates have sparked increase demand for refinances, though purchase demand has been slow to respond on account of persistent rate lock-in effects for existing homeowners with lower interest rates.
The average rate on all existing outstanding residential mortgages was 4.3% as the first quarter of 2025, according to Fannie Mae’s National Mortgage Database. More than 80% of mortgages carry handles under 6%, says Realtor.com.
For those who could afford to purchase, June, July and August presented “the strongest buyer’s market” in the past decade, says Redfin, with sellers outnumbering buyers by 35%. September boosted affordability, as average rates for 30-year fixed mortgages fell from 6.58% for the week ending Aug. 28 to 6.26% for the week ending Sept. 18, per Freddie Mac.
Setting aside rate lock-in effects, mortgage rates hovering in the low-6% range may trigger homebuyer activity more rapidly in certain markets based on the share of owner-occupied homes financed with mortgages, a new report from Realtor.com suggests.
Washington, D.C., Denver and Virginia Beach, Va., have the highest rates of mortgage utilization by share of mortgaged households than any other U.S. metro, at 73.6%, 72.9% and 70.7%, respectively. In metros with a high share of mortgaged homeowners, falling mortgage rates would theoretically unlock more inventory choices for prospective buyers.
“Meanwhile, metros with older populations and more outright owners, like Buffalo or Miami, may see a lower market-level response, even though lower rates are a difference-maker for some individuals in these markets,” said Danielle Hale, chief economist at Realtor.com.
Miami has the highest share of outright owner-occupied homes of any U.S. metro at 44.8%. Buffalo, N.Y., and Pittsburgh have the second-highest share, each at 44.2%. Across the U.S., nearly two-thirds of residential housing units are owner-occupied, and nearly two-thirds of those homeowners have a mortgage, according to Realtor.com.
The impact on sellers with mortgage rates holding in the low-6% range could be more uncertain, however. Sellers in metros with high rates of mortgaged homeowners may see “faster-moving markets and stronger competition,” while those in outright-owner markets “may find conditions steadier and less volatile,” the Realtor.com report indicates.
On the state level, the District of Columbia (74.3%), Maryland (70%), Colorado (69%), Utah (68%) and California (66%) have the highest share of mortgaged homeowners, while West Virginia (44.9%), Mississippi (48.4%), New Mexico (49.4%), North Dakota (51.3%) and Louisiana (51.8%) have the highest share of outright owners.
