Raleigh Mortgage Rates Dip to 7.18%, but Buying Still Costs $1,400 More Than Renting

Mortgage rates just fell for the third week in a row, and Raleigh home prices have cooled this fall. That sounds like good news for families in Wake County who want to stop renting. But the monthly cost of buying is still far above the cost of renting. Here is what the latest numbers show, and how one of our eleven ideas would help.

Mortgage rates dip, but stay above 7%

Freddie Mac says the average 30-year fixed mortgage rate was 7.18% on November 5. That is down from 7.24% the week before. But a year ago, the same rate was 6.22%. So borrowing to buy a home still costs much more than it did last fall.

Raleigh home prices cooled this fall

A Triangle market report from Tidal Realty Partners, using Triangle MLS data, found that Raleigh's median sold price was $425,000 for September closings. That was the second-lowest month in the past year. Homes took about 52 days on average to sell, and eight of twelve Triangle towns closed September below their 12-month median price.

In other words, buyers have more time and more room to negotiate than they did in the spring. Prices are not the main problem right now. The monthly payment is.

Buying costs about $1,400 more per month than renting

Rental Beast's Q3 report for the Raleigh-Cary area found a median 3-bedroom rent of $1,500 a month, down 16.4% from a year ago. Nearly 60% of rental listings offered a deal, such as free rent, to sign a lease.

The same report estimated that buying a typical home costs $2,939 a month once you add taxes and insurance. That is $1,439 more per month than renting, the widest gap in its data going back to late 2023.

Here is a simple example of our own. Say a family buys a $425,000 Raleigh home with 20% down and borrows $340,000. At 7.18%, principal and interest comes to about $2,303 a month. At last year's 6.22%, it would have been about $2,087. Your rate and costs will differ.

When renting is that much cheaper, many Wake County families keep renting, even though owning a home is how most families build wealth.

One idea: a lower monthly payment, and more homes

Idea 1, Lower Home Payments and Build More Homes, goes straight at that monthly gap. A buyer who qualifies could get a second loan for up to 35% of the home's value. That loan would have no interest and no monthly payment. When the home is sold, the buyer repays the amount borrowed plus a share of the home's gain in value. Repaid money is lent again to future buyers.

Using the same $425,000 home, suppose a buyer puts 20% down and uses a 30% second loan. The regular mortgage would drop to $212,500, or about $1,440 a month at 7.18%. That is our own rough example, not a promise of savings.

The plan also calls for more starter homes, easier financing for condos and townhomes, and a first chance for renters to buy from large landlords. Regional price caps are meant to keep the help from simply pushing prices up.

There is a real tradeoff. The buyer gives up part of the future gain in exchange for a lower payment now. For many families, the fair comparison is years of renting and building no equity at all. These are draft ideas, not current law.

Tell us what you think

Would a lower monthly payment help your family move from renting to owning in Raleigh or anywhere in Wake County? Vote yes, no or not sure on Idea 1, and add a private comment if you like. Visitor votes are not a scientific poll, but they show us which ideas people actually want.

If you care about costs like these and have ever thought about public service, our Run for Office page explains how to start.

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