Ask Kristin & Libbi: What’s Going On With Interest Rates?
It’s one of the questions we hear most often from buyers right now: Should I buy now, or should I wait for interest rates to come down?
It’s an understandable question. Interest rates have changed significantly from the unusually low rates buyers became accustomed to a few years ago, and that change has a very real impact on monthly payments and purchasing power.
But when our clients ask us where rates are headed next, our answer is pretty simple: We don’t know—and we don’t think you should build your home-buying plans around trying to predict it.
Start With the Payment, Not the Rate
Instead of focusing on what interest rates might do six months or a year from now, we encourage buyers to start with a different question:
What monthly housing payment can I comfortably afford today?
And that means looking at more than just the mortgage payment. Property taxes, homeowners’ insurance, HOA fees when applicable, and other expenses associated with owning the home all need to be part of the conversation.
This is where working with a trusted local lender becomes especially important. An experienced local lender can help you understand what different purchase prices and interest rates mean for your actual monthly payment, not simply how much you qualify to borrow.
There can be a big difference between what you can qualify for and what you can comfortably afford while still leaving room in your budget for everything else life brings.
What If Rates Come Down Later?
They might. And if they do, refinancing could potentially be an option for some homeowners.
But we never want a buyer to purchase a home today based on the assumption that they’ll be able to refinance into a lower rate later. Rates may come down, they may stay where they are, or circumstances could change in ways none of us can predict.
Our advice is to make sure the home and payment work for you at today’s numbers. If a refinancing opportunity comes along later, that can be a bonus,not something you need in order to make the purchase affordable.
There’s Another Side to Lower Rates
There’s something else buyers sometimes overlook when they say they’re waiting for rates to drop.
They may not be the only ones waiting.
If rates come down, buyers who put their home searches on hold may decide it’s time to jump back into the market. More buyers looking for homes can mean more competition for the same properties—and potentially more multiple-offer situations.
So while a lower interest rate could reduce the cost of borrowing, increased buyer demand could also mean paying more for the home itself or having less negotiating power.
That’s why simply saying, “I’ll buy when rates come down,” doesn’t necessarily guarantee a better deal.
So, Is Now the Right Time to Buy?
That depends much more on you than it does on the interest rate.
Are you financially comfortable with the monthly payment? Do you expect to stay in the home for a reasonable amount of time? Does buying fit your current lifestyle and your longer-term goals? Have you talked with a lender and understand the true cost of the purchase?
If those pieces make sense, it may be worth exploring your options now rather than putting your plans on hold waiting for the “perfect” rate.
The Moral of the Story
Time the market around what makes sense for you, your goals and your budget—not around trying to perfectly time interest rates.
None of us can predict exactly where rates will go next. What we can do is help you understand the market you’re buying in today, connect you with trusted lending professionals, and help you make a decision that feels comfortable for both today and the foreseeable future.
If you’ve been thinking about buying but aren’t sure what the current market means for you, reach out to us. Sometimes the best first step isn’t deciding whether to buy, it’s simply getting the information you need to understand your options.
— Kristin & Libbi
