Homebuyer affordability in September reached levels not seen since early 2023 as easing mortgage rates raised homebuyers’ purchasing power, according to the October 2025 Mortgage Monitor report from ICE Mortgage Technology, a division of Intercontinental Exchange Inc.
“The recent pullback in rates has created a tailwind for both homebuyers and existing borrowers,” noted Andy Walden, head of mortgage and housing market research at ICE. Walden described the tailwind as “beginning to bolster purchase demand” while opening a window for current borrowers to lower monthly payments with rate-and-term refinances.
ICE reported that principal and interest (P&I) costs have declined to 30% of the median U.S. household income, an improvement from 32% earlier in the summer and late 2023’s peak of 35%. Skyrocketing insurance costs have played an outsized role in rising overall mortgage payments, averaging 70% growth nationally over the past five years, compared to a 23% increase in principal, 27% growth in interest and 27% growth in property taxes.
Rates on 30-year fixed mortgages averaged 6.26% in mid-September, according to ICE data, nearly 75 basis points lower than where they started 2025. The decline pushed the P&I portion of monthly payments on average-priced homes to $2,148 last month.
A deceleration in annual home price gains has also helped ease P&I burdens. Prices rose 1.2% nationally in September on an annual basis, ICE reported, “driven by falling inventory and improved affordability.” After months of rising inventory, some sellers have begun to delist their properties in oversupplied markets, avoiding price cuts by waiting for purchase demand to emerge.
All totaled, current market conditions have weighted homebuying in favor of a “more credit-qualified borrower mix,” ICE stated. The average credit score for purchase rate locks climbed above 736 in September, the highest level since ICE began tracking the metric six years ago. Averaging 38.5%, debt-to-income ratios have fallen to their lowest level in 2.5 years.
