Homes are more affordable than you might think, according to a new report from a mortgage research firm.
Home affordability - based on a compilation of data related to the mortgage industry - is at its best level in almost three years, according to this month’s Intercontinental Exchange’s Mortgage Monitor report.
The report also discovered that homeowners are tapping their equity through home equity loans and lines of credit at collective amounts not seen since 2007, signaling that they’ve got equity to use, and a low enough mortgage rate that refinancing wouldn’t make financial sense.
The report also noted one concerning trend - that the average borrower only checks rates with one or two mortgage lenders before making a decision.
What the new data means for you
That housing is at its most affordable point in nearly three years may feel counterintuitive to the average consumer. The cost of everyday goods is still relatively high, and the majority of consumers believe their household finances are worse off than they were a year ago.
So, it helps to know how the Intercontinental Exchange, a financial services firm that provides deep dives on the U.S. mortgage market, calculates affordability. Here’s an overview of its process:
- Find the average mortgage rate, which was 6.25% in the report
- Multiply the mortgage rate by the median home price to find the cost of a principal-and-interest mortgage, which was $2,126.
- Then, divide that mortgage payment by the median household income.
The affordability metric was 29.7 percent in the Intercontinental Exchange’s December report, which marked its lowest point since early 2023 and the second-straight month it fell below 30 percent.
However, it’s important to remember that housing affordability is a broad look at the mortgage market. If you’re shopping for a home, remember that your individual situation may be different than what’s happening in the wider market. Don’t feel rushed to buy a home because affordability is high based on national averages.
A jump in home equity loans
The December report found that homeowners tapped their equity through home equity loans and lines of credit for a combined $33 billion in the third quarter of the year, the highest amount since 2007.
Additionally, Intercontinental noted that home equity loans and home equity lines of credit made up 59 percent of Q3 equity withdrawals, which was the highest share in more than two decades.
The equity data points are an indication of several things:
- Homeowners have equity to tap - the average withdrawal was $86,500 in September and October, according to Intercontinental.
- Current mortgage rates are higher than some homeowners’ existing mortgage rates, which means refinancing to access equity doesn’t make much sense.
- Home equity loan and line of credit rates are low enough to attract borrowers. For example, the average home equity line of credit rate matched the 2025 low of 7.81 percent at the end of November, according to Bankrate.
So, if you’re considering using your home’s equity, the Intercontinental Exchange’s data indicates it may be a good time to do it, depending on your specific mortgage rate and equity.
Bucking the trend on borrowing
The Intercontinental Exchange noted that 78 percent of mortgage borrowers check with just one or two lenders before making their borrowing decision. The data reveals that borrowers are bucking the traditional advice of checking rates with multiple lenders before signing for their funding.
There may be several reasons for that, said Kristina Morales, CEO of real estate financing resource Loanfully.
“There are dozens of reasons borrowers fail to shop lenders,” she told The Independent by email. “The main one is they’re not informed about the lending process, and they’re overwhelmed by new lending and financial terminology.”
Morales also noted that some homebuyers may be worried that getting multiple mortgage quotes could result in multiple credit inquiries showing up on their credit report.
In reality, though, scoring models tend to treat multiple inquiries for the same type of loan as a single inquiry, provided they occur within a 45-day window, according to the Consumer Financial Protection Bureau.
She also said that sometimes buyers find the home they want and have to move quickly to get their offer in.
“I encourage my clients to be prequalified by multiple lenders before looking at a house,” she said. “This allows them to focus their attention on homes they can afford using the best loan product. It saves their time (and mine) and gives them a realistic mindset when shopping for homes.”
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