It seems like every week there’s a new headline about mortgage rates rising or dropping — and if you're thinking about buying (or even just watching the market), it's easy to wonder:
“Should I wait for rates to go down?”
or
“If rates are higher, will home prices come down too?”
These are smart questions — and the answers aren’t always straightforward. Let’s break it down in plain English.
💸 1. What Are Interest Rates, Really?
Mortgage interest rates are basically the cost of borrowing money to buy a home.
The higher the rate, the more you’ll pay in interest over the life of the loan — and the higher your monthly mortgage payment.
But rates don’t exist in a vacuum. They’re tied to:
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Inflation
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The Federal Reserve’s policy
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The bond market
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Overall economic conditions
And they change often — sometimes daily.
📉 2. When Rates Go Up, Buying Power Goes Down
Here’s what that means for you:
Let’s say you qualify for a $500,000 home at a 5% interest rate.
If rates go up to 6.5%, that same monthly payment might now only afford a $445,000 home.
That’s a $55K drop in buying power — with no change in your income or down payment.
That’s why even a 1% rate change can significantly impact how much home you can afford.
📈 3. Do Higher Rates Mean Lower Home Prices?
Sometimes — but not always.
In theory, higher rates can cool demand, which may lead to softer pricing or more room to negotiate.
But in practice, it depends on your local market.
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In some areas, low inventory keeps prices stable (even when rates rise)
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In others, prices may flatten or drop slightly — but not dramatically
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Some sellers choose not to list at all when rates rise, which can limit your options
So yes, rates influence prices — but they don’t control them entirely.
🏠 4. What’s Better: Lower Rate or Lower Price?
This is the classic buyer question.
A lower rate means a lower monthly payment.
A lower price means less debt (and less interest paid over time).
Here’s the real answer:
The best move is the one that fits your budget and timeline — not the market’s perfect moment.
You can’t always time the market, but you can structure a smart deal when the time is right for you.
And if rates drop in the future? You can refinance.
🧠 5. What Should You Do Right Now?
Whether you’re 2 months or 12 months out, here’s how to stay ahead of the rate game:
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Watch rates — but don’t obsess over headlines
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Focus on your monthly comfort zone, not just home price
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Get pre-approved so you know your current buying power
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Talk with a trusted lender and agent (I can connect you)
And remember — you’re not buying a rate, you’re buying a home and a future.
Rates go up, rates go down — but life doesn’t always wait for the “perfect” window.
If you’re curious about how current rates affect your options — or just want to understand your numbers better — I’m always happy to help. No pressure, no rush. Just real talk.
Whether you’re just curious or ready to dive in, I’d love to help you navigate the process with confidence. Call/text me at 773-865-5661 or email me at [email protected]
