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Should I Wait for Mortgage Rates To Come Down Before I Move?


If you’ve got a move on your mind, you may be wondering whether you should wait to sell until mortgage rates come down before you spring into action. Here’s some information that could help answer that question for you.

In the housing market, there’s a longstanding relationship between mortgage rates and buyer demand. Typically, higher rates equate to lower buyer demand. That’s because some people who want to move will be hesitant to take on a higher mortgage rate for their next home. So, they decide to wait it out and put their plans on hold.

But when rates start to come down, things change. It goes from limited or weak demand to good or strong demand. That’s because a big portion of the buyers who sat on the sidelines when rates were higher are going to jump back in and make their moves happen. The graph below helps give you a visual of how this relationship works and where we are today:

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As Lisa Sturtevant, Chief Economist for Bright MLSexplains:

“The higher rates we’re seeing now [are likely] going to lead more prospective buyers to sit out the market and wait for rates to come down.”

Why You Might Not Want To Wait

If you’re asking yourself: what does this mean for my move? Here’s the golden nugget: according to experts, mortgage rates are still projected to come down this year, just a bit later than they originally thought. But when it does inevitably happen, buyers will flood the Boston real estate market and you will be forced to compete with an exponential amount of people for the same listings. This increase in demand can lead to higher home prices, an increase in multiple offer scenarios, and overall, a more stressful home buying journey. It's also important to keep in mind that you're not married to today's rates, so when they do drop, you'll have the opportunity to refinance your mortgage, meaning you will have avoided the hassles of strong demand by getting started before other buyers jump back into the market, but will be able to take advantage of lower rates as they drop later this year,

In the last decade, home buyers have become accustomed to low mortgage rates, commonly between 3-4%, but keep in mind that until they hit a record low of 3.35% in November of 2012, rates of 8-9% were status quo, with a historical peak of 18.45%. When you analyze mortgage rates from this perspective, and consider the fact that experts still project rates to go down over the course of the year, it may be a good, strategic time to make your move.

Bottom Line

Buyer demand is a considerable factor when deciding when to buy a new home. Often, it can have as significant of an impact on monthly payments as higher rates and home values. Of course, there is much to consider when making a large decision such as this, so if you're thinking of a move and want to understand all the pieces of the puzzle, reach out and we'll connect you with one of our local experts. Every agent at The Charles Realty has extensive insight into the Boston real estate market, and is adept at strategies for executing lucrative and seamless transactions, both for buyers and sellers. 

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