Home affordability in the United States has reached its best level in two and a half years, helped by falling mortgage rates, according to data released on Monday from ICE Mortgage Technology.
The company’s October 2025 Mortgage Monitor report found that 30-year mortgage rates averaged 6.26% in mid-September, lowering the monthly principal and interest payment on an average-priced home to $2,148. That equals 30% of the median U.S. household income, down from 32% earlier this summer and well below the 35% peak in late 2023.
The Federal Reserve cut its benchmark rate by a quarter point on Sept. 17, 2025, pushing the 10-year Treasury yield to a five-month low ahead of the decision. Mortgage rates briefly dipped to 6.22%, their lowest in nearly a year, before rebounding, while spreads over Treasuries narrowed to their tightest since early 2022.
Markets now expect 30-year mortgage rates to hover near 6.25% by year’s end and 6.15% by early 2026, giving room for improved homebuyer affordability and buyer loan qualification.
“The recent pullback in rates has created a tailwind for both homebuyers and existing borrowers,” said Andy Walden, head of mortgage and housing market research at ICE. “We’re seeing affordability at a 2.5-year high, which is beginning to bolster purchase demand, while creating more opportunities for homeowners to lower their monthly payments with a rate-and-term refinance loan.”
While affordability has improved, the report noted sharp disparities across markets. About a dozen of the 100 largest housing markets — many in the Midwest — are nearing long-term average affordability levels.
“As affordability improves and homeowners gain the ability to refinance, lenders and servicers need to be ready to act quickly,” said Tim Bowler, president of ICE Mortgage Technology.
Coastal cities, however, remain stretched; in Los Angeles, 62% of the median income is needed to buy an average-priced home.
Mortgage delinquencies usually see little seasonal change between July and August, but the month ended on a Sunday in 2025, pushing some last-day payments into September and creating a temporary uptick, the company reported. The national delinquency rate rose by 16 basis points in August to 3.43% and is up 10 basis points from the same time last year.
The report also found that home prices firmed in September after eight months of slowing, with annual price growth up 1.2%. Tighter inventory and improved affordability supported the gains, particularly in the Northeast and Midwest.
Nationally, listings remain about 18% below 2017–2019 norms, as sellers in previously oversupplied markets hold back to avoid price cuts.
In September, 80% of markets saw price increases, the highest share in nine months, while just 20% declined, down from more than half in July. Still, nearly half of the major markets remain below recent peaks.
Borrower profiles also point to improved financial stability. The average credit score for purchase locks climbed above 736, the highest in the six-year history of ICE’s dataset, while debt-to-income ratios for purchase loans fell to a 2.5-year low of 38.5%.
For rate-and-term refinances, debt-to-income ratios dropped to 34.1%, the lowest in 3.5 years.
