Why You Don’t Need To Be Afraid of Today’s Mortgage Rates
Mortgage rates have been the big scare in real estate lately. Every time they rise, buyers hesitate and think, “Maybe I’ll just wait.” But here’s the catch: waiting for that “perfect” 5% rate could end up costing you more in the long run.
The Real Impact of the “Magic Number”
According to the National Association of Realtors (NAR):
“. . . a 30-year fixed rate mortgage of 6% would make the median-priced home affordable for about 5.5 million more households—including 1.6 million renters. If rates were to hit that magic number, it’s likely that about 10%—or 550,000—of those additional households would buy a home over the next 12 or 18 months.”
If rates do drop closer to 6%, experts expect a surge of buyers to jump back into the market. That extra demand will likely push prices up again.
And while a 5.99% rate sounds like a great deal, the savings might not be as big as you think. Take a look at the numbers (see chart below):
On a $400,000 loan, the difference between today’s 6.2% rate and 5.99% is only about $50 a month — less than many people spend on coffee or takeout each week.
If prices rise because of renewed buyer competition, that small rate drop could quickly be offset by higher home costs.
If prices rise because of renewed buyer competition, that small rate drop could quickly be offset by higher home costs.
So if you’re waiting for that “magic” rate, you might be missing out on today’s advantages — more homes to choose from, stronger negotiating power, and fewer competing buyers.
Those benefits will fade fast once rates dip below 6%, because that’s when many buyers plan to make their move.
Why Buying Now Makes Sense
Jessica Lautz, Deputy Chief Economist and VP of Research at NAR, says:
“Over the last 5 weeks, mortgage rates have averaged 6.31%. This has provided savvy buyers a sweet spot to reexamine the home search process with more inventory, widening their choices.”
Matt Vernon, Head of Retail Lending at Bank of America, adds:
“Rather than waiting it out for a rate that they like better, hopeful homebuyers should assess their personal financial situation—if the house is right for them, and the upfront and monthly payments are affordable, it could be the right chance to make a move.”
Bottom Line
If today’s mortgage rates make you nervous, remember that waiting could mean higher prices and more competition later.
Once rates slip under 6%, the crowd will return — and the best opportunities may already be gone.
Once rates slip under 6%, the crowd will return — and the best opportunities may already be gone.
So don’t let today’s rates hold you back. If you’re financially ready, this could be your moment to find the right home before the market heats up again.
The information and opinions in this article are not investment advice. Tim Stice makes no guarantees about accuracy or completeness. Always do your own research and consult a professional before making financial decisions. Tim Stice is not liable for any loss or damage resulting from reliance on this content.
Tim Stice, Broker Realtor | Hawaii Life | Maui, Hawaii | Real Estate Agent
