We’ve prepared a chart that shows how much your monthly payments can differ based on the amount of the loan, comparing the recent peak interest rate of 7.5% with today’s lower rates.
As you can see, when the interest rate drops, your monthly payments decrease, or you could afford a higher-priced home. Generally, for every $50 increase in your mortgage payment, you can afford a home that’s $10,000 more expensive.
This is why we expect more buyers to enter the market as interest rates fall, but for now, many potential buyers are holding off, hoping for rates to drop even further.
However, every market has its ‘golden time,’ and right now, we are in that period. As I often say, real estate prices are determined by the balance of supply and demand. While interest rates are dropping, many buyers have not yet entered the market. As a result, competition is low, prices are stable, and buyer purchasing power is at its peak.
By next spring, it’s likely that many more buyers will enter the market. That’s why the period between now and February might be the best ‘golden time’ we’ll see for a few years.
Worried about rates dropping further? You can always refinance later. Buying a home now at a lower price and refinancing later is often a smarter financial move than waiting for lower rates and paying a higher price.
Feel free to reach out if you have any questions, and I’ll be back with more helpful tips in the future!
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