Welcome to Money As If, the 3% mortgage rate you scored when you bought a house at the height of the last recession:

— Jeanine

P.S. Liking Money As If? Share that referral link below!

I mentioned in my 2025 year-end round-up that there's been a big shift among personal finance talking heads around homebuying. For the longest time, conventional wisdom suggested it was the absolute smartest thing a person could do with their money, given that houses appreciate and renting entitles you to nothing.

Now, experts are much more willing to concede that the inflated prices of homes, mortgages, maintenance, insurance, and more have made buying a home untenable for many, many (dare I say, most) Americans.

There have been some recent developments, however, that suggest "relief" is on the way for existing and prospective homebuyers. Namely, mortgage rates have hit a three-year low.

A 6% rate on a 30-year-old mortgage (the new average) certainly beats a 7% rate, the average this time last year. But it's still much higher than the record low 2.65% rate on offer at the height of COVID and the prior record low of 3.4% back in 2013.

But, beyond that, mortgage rates are just one small part of the homebuying equation. And they're not the big issue when it comes to housing affordability or, perhaps more accurately, our current lack thereof.

To illustrate, let's consider my parents, who purchased their home back in 1977 for $67,500.

They put down $27,500 and financed the remaining $40,000 with a 30-year mortgage at an 8% interest rate. That netted them a $292 monthly mortgage payment (the equivalent of $1,562 in 2026 dollars) — and cost them around $65,000 in total interest once they fully repaid the loan 28 years later. (Good job, Boomers.)

Nowadays, the average house in the U.S. costs around $534,000. Let's assume you qualify for that 7% rate on a 30-year mortgage and can scrape together the recommended 20% down payment of $106,800.

Your monthly mortgage payment would be $3,134 before adding home insurance and property taxes, and, assuming you don't pay your mortgage off early, you'd pay $701,273 in total interest.

It gets a bit better once you start math-ing based on prior lows.

But these are pretty close to best-case scenarios. They assume a 20% down payment and that you're buying an average-priced home that doesn't require significant renovations. And, because they're theoretical purchases, they don't include property tax or home insurance estimates. (You need a zip code for that.)

Once you add in those costs, plus utilities, the average American (making a median of $83,730 a year) is going to violate that old-school rule that says don't spend more than 30% of your gross income on housing.

Plus, when you start to consider less ideal (and perhaps more realistic) scenarios, the numbers get much, much worse. Here's how they work out if you're trying to purchase a house in (a) Burbank, California, and (b) Downtown Austin with a 10% down payment. (These figures do include estimates for property tax and home insurance.)

All of this is to say:

They're not the only problem, for sure, but, unless they come down, the market isn't going to get markedly more affordable.

Now, there's a chance that lower mortgage rates could lead to a decrease in housing prices. In healthy markets, the opposite tends to happen. (Lower rates force prices up.)

But this isn't a healthy market, and one of the big things purportedly holding back today's lack of supply (the primary driver of prices) is the lock-in effect: People are holding on to homes they would sell if that didn't require trading in the cushy 3% to 5% rates they scored during recent downturns for pricier arrangements.

So, sure things could get … less expensive as rates come down. But homes are highly unlikely to become magically affordable in the short term, absent other interventions.

And, listen, I know I'm not telling you anything you don't already know. But I felt compelled to validate and commiserate with everyone staring at recent headlines (and CEO advice) suggesting a buyer's market has rolled into town.

FWIW, buying a house isn't a wholesale bad option, so if you are considering a purchase, keep these things in mind:

Your inbox is flooded with newsletters. Your feed is chaos. Somewhere in that noise are the insights that could transform your work—but who has time to find them?

The Deep View solves this. We read everything, analyze what matters, and deliver only the intelligence you need. No duplicate stories, no filler content, no wasted time. Just the essential AI developments that impact your industry, explained clearly and concisely.

Replace hours of scattered reading with five focused minutes. While others scramble to keep up, you'll stay ahead of developments that matter. 600,000+ professionals at top companies have already made this switch.

Join them today, for free.

I mentioned a while back that I was pursuing my Certified Educator in Personal Finance (CEPF) designation to, among other things, upskill and beef up my resume in this very, very tough job market, and I’m pleased to announce that, as a New Year's resolution, I finally carved out the time to take (and pass!) the final test.

Upskilling, of course, isn’t the only way to up your odds of getting a job in this economy. If you're currently looking, lean heavily into your network (lots of opportunities come through secondary referrals), learn AI (I know, I know), and optimize your resume to pass ATS (i.e. robot-powered) systems.

Nowadays, most financial takes are boilerplate. These aren't.

And, finally, today, in things I have bought when I could buy things …

I've been changing this section up lately, since luxury-gawking just isn't what it used to be, given the Current State of Things™️, and, so, today here's another "affordable" product recommendation, courtesy of myself and Ann (aka Money Af If’s resident shopping expert, aka my mom).

If you like baubles but can't justify the high price tag of designer (or even non-designer) goods, might we suggest Mint & Lily, an online brand that makes affordable and personalized jewelry, like the birthstone bracelet I brought my mother (a long-term Mint & Lily fan) for Christmas, pictured above. Price: $69 after using a first-time buyer’s discount.

The jewelry is cosmetic (it’s gold-plated, not actual gold) and, full disclosure, Mint & Lily will send you a lot of marketing emails if you give them an address to get a discount. But the pieces are sweet and, unlike other online jewelers that have popped up and seduced me via my Facebook page, decidedly rust-proof.

So, yeah, worth a dip.

Got questions, comments, receipts, tips, thirst traps, etc. you’d like to share? Send them to [email protected].

_{This article is for educational purposes only. We don’t recommend or advise individuals to buy, not buy, sell, or not sell particular investments or other assets, as everyone’s circumstances are different. Also, it’s your money and ultimately up to you to decide the best use for it.}