Should you wait for interest rates to come down before buying?

Over the past two years, interest rates have doubled. While today’s rates are still considered average (historically speaking), many buyers are second-guessing entering the market knowing those higher rates have lowered their purchasing power.  For example, a home costing $1m last year with 20% down, and a 3.5% interest rate would have a monthly payment around $4900 vs that same home with a 6.75% interest rate would be $6500.

So where are interest rates going? Many economists are predicting a recession at the end of this year or beginning of next; if that happens, we’ll likely see a 1-2% drop from current rates; not even close to the 3% we saw a couple years ago.

Should you wait to buy then? With the shortage of homes to choose from, if the right home comes on the market that suits your needs (and financial situation); don’t let the rate slow you down. You can always refinance to take advantage of lower rates if they drop, but you won’t always be able to find the perfect home.  For many buyers, if they wait until rates go down, they’ll be competing with everyone else waiting for the rate drop (we saw this in 20-21 when some were able to get rates below 3%).  As the saying goes, “marry the house, date the rate”!