Mortgage interest rates have remained higher than many expected this year.
While some economists predict we may see modest rate drops later this year or into early 2026, there’s still uncertainty around when and how much rates will actually decrease. Even if they do begin to fall, it’s unlikely we’ll return to the ultra-low rates of 2020–2021. So, the real question becomes: should you wait?
The short answer: probably not. Holding off on a purchase could end up being more expensive than you think. We are currently in a buyers’ market with plenty of homes to choose from and a lot of negotiation power not only on the purchase price but also terms and repairs.
HOW LOWER INTEREST RATES AFFECT BUYERS
For buyers, lower interest rates directly impact affordability.
1. LOWER MONTHLY PAYMENTS
The biggest and most obvious benefit is a lower monthly mortgage payment. A decrease in interest rates — even by just half a percentage point — can save buyers hundreds of dollars each month.
Let’s say you’re buying a $400,000 home and putting 20% down. Here’s how your payment changes:
- At a 7.0% interest rate: ~$2,129/month (principal & interest only)
- At a 6.0% interest rate: ~$1,918/month
- At a 5.5% interest rate: ~$1,817/month
2. INCREASED BUYING POWER
Lower rates don’t just reduce payments — they also increase how much home a buyer can afford. For every 1% drop in interest rates, buyers can often afford roughly 10% more in purchase price while keeping the same monthly payment.
THE TRAP OF “WAITING FOR RATES TO DROP”
Is it smarter to wait until rates drop before buying? It may sound logical, but waiting could actually cost you more.
YOU’RE NOT THE ONLY ONE WAITING
Many would-be buyers are on the sidelines, watching and waiting. The minute interest rates start to drop significantly, those buyers will jump back in, flooding the market with demand.
If you wait for rates to drop, you may find yourself competing in a hot market, facing bidding wars, limited inventory, and sellers who suddenly have the upper hand. In some cases, the increase in home prices can wipe out any benefit you’d gain from the lower interest rate.
TIMING THE MARKET IS A GAMBLE
Trying to time the market perfectly, waiting for rates and prices to align just right, is nearly impossible. Market conditions can change quickly, and there’s no guarantee rates will drop when or how you expect.
And even if rates do drop, that doesn’t mean you’ll find the right house or win the bidding war when you do. Buying when the market is calmer gives you more negotiating power and less competition. And if rates do drop later, you can always refinance.
THE REFINANCE OPTION: DATE THE RATE, MARRY THE HOME
One of the most popular phrases in today’s market is: “Date the rate, marry the home.”
This means buying the right home now — even if rates are higher — and refinancing later when rates drop. You lock in the home you love at today’s price, and when the opportunity comes, reduce your mortgage payment through refinancing.
- This strategy gives you the best of both worlds:
- You avoid paying more for the same home later.
- You gain equity as prices rise.
- You save on future interest by refinancing.
FINAL THOUGHTS
Lower interest rates create momentum in the real estate market. They empower buyers with greater affordability and motivate sellers with increased demand. But waiting for rates to drop could backfire — causing you to face steeper competition, rising prices, and missed opportunities. If you’re ready to make a move, now may be the best time to buy.
Whether you’re buying, selling, or both, make sure you have an experienced Realtor to guide you through the current market — and help you plan for what’s ahead.
If you’re considering buying or selling or just want to better understand how current interest rates and market conditions may affect your plans, I’d be happy to help. Feel free to reach out any time for a personalized consultation or to get the latest local market insights.