Mortgage rates climbed for the second week in a row, denting home affordability in the middle of homebuying season.
The average rate on the 30-year fixed-rate mortgage went up seven basis points to 7.01% in the week ending May 15, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.
Markets move in mysterious ways, and if you asked a dozen economists why mortgage rates have been rising, they would give you two dozen guesses. Mercurial trade policy has likely contributed to the rise in mortgage rates, along with Federal Reserve monetary policy and ambiguous inflation data.
The effect on home affordability
Since the beginning of May, the 30-year mortgage’s average rate has risen 14 basis points — over one-eighth of a percentage point. The difference has a small but real effect on home affordability.
Let’s say you can afford to pay $2,300 a month in principal and interest. At this week’s average rate of 7.01%, you could afford to borrow $345,400. Two weeks ago, at 6.87%, you could have borrowed $4,900 more: $350,300.
Because mortgage rates fluctuate, it’s a good idea to shop for homes that are well within your range of affordability. When you look at houses at the upper limit of what you can manage at today’s rates, a slight increase in rate could push those houses past your ability to make the monthly payments — even if prices don’t change.
After the home seller has accepted your offer, and the lender has approved your mortgage application, you’ll face the decision of when to lock the mortgage rate. After consulting with your loan officer, you might want to lock it promptly to protect against rising rates.
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The outlook for households earning $75,000
Surprisingly, affordability actually improved in the last year for households with modest incomes, according to a joint analysis from Realtor.com and the National Association of Realtors.
Households earning $75,000 a year could afford 21.2% of home listings in March — up from 20.8% a year earlier, according to the report. The slight uptick in choices might have been driven by a 20% increase in the inventory of homes for sale.
“The housing market is at a turning point,” Nadia Evangelou, senior economist and director of real estate research for NAR, said in a news release. “More homes are hitting the market, and it’s encouraging to see the greatest housing-supply gains among middle-income home buyers.”
Cities with homes under $200,000
A few markets are affordable for households that make under the median. NAR conducts a quarterly survey of house prices in 228 cities and metropolitan areas. In the report for the first quarter of 2025, NAR counted 17 markets with median home prices under $200,000.
The least expensive city was Decatur, Illinois, with a median home price of $138,100. Wichita Falls, Texas, had a median home price of $198,500. Between those two were 15 metros, including medium-size cities such as Charleston, West Virginia, and Akron, Toledo and Youngstown, Ohio.