Primary Home and Rental Property Interest Rates: The Lowest Since 2022

In a significant shift, primary home interest rates have hit their lowest point in almost 2 years. For potential homebuyers, this opens up new opportunities to secure more affordable financing. Meanwhile, those looking to invest in real estate should also take note—rental property interest rates (DSCR loans) are now dipping below 7%, making it a more attractive time to finance rental properties. Let's explore what’s driving these changes and what they mean for both homeowners and investors.

Understanding Primary Mortgage Interest Rates

Primary mortgage interest rates, which apply to individuals purchasing or refinancing their primary residence, are closely tied to the 10-year Treasury bond yield. The yield on these bonds serves as a benchmark for lenders when determining fixed mortgage rates. In recent months, we’ve seen a softening in the 10-year Treasury, which has led to more favorable rates for homebuyers. As these bond yields decline, mortgage lenders adjust their rates downward, creating an environment where purchasing a home becomes more affordable.

If you’re considering buying a home, this is an excellent opportunity to lock in a lower rate while they are still relatively attractive.

Rental Property Interest Rates (DSCR) and the 5-Year Treasury

When it comes to rental property loans, the rates are typically based on the 5-year Treasury yield. Debt Service Coverage Ratio (DSCR) loans, a popular financing option for real estate investors, are now seeing interest rates below 7%, a level we haven’t seen in some time. DSCR loans are used to finance rental properties based on the property’s cash flow rather than the borrower’s income, making it easier for investors to scale their portfolios.

With the 5-year Treasury yield seeing a dip, rental property loans are becoming more affordable. Lower rates mean lower monthly payments, improving cash flow for investors. If you’ve been on the fence about expanding your real estate holdings, now might be the time to make a move.

Why This Matters Now

For both homebuyers and real estate investors, interest rates play a crucial role in determining the affordability and profitability of any purchase. With primary home mortgage rates at their lowest since 2022 and DSCR loans for rental properties now below 7%, this is an ideal moment to either purchase a home or invest in rental properties.

Both markets are seeing favorable conditions due to the decline in Treasury bond yields. The 10-year Treasury influences the rates for primary homes, while the 5-year Treasury dictates rates for rental properties. As these yields decrease, lenders pass on the savings to borrowers, making this a strategic time to take advantage of the current rate environment.

Final Thoughts

Whether you're looking to buy your first home or expand your real estate portfolio, today's interest rates offer a compelling reason to act now. Take advantage of lower primary mortgage rates and below-7% DSCR loans for rental properties. With rates tied to Treasury yields, a window of opportunity has opened—but like all things in real estate, timing is everything.

If you’re considering making a move in either market, don’t wait too long—interest rates can shift quickly, and the best deals are often available to those who act decisively.