Rates Went The Wrong Way. So… Do You Hit Pause?

Rates went the wrong way. So… do you hit pause?

Every buyer is asking it right now: “Should I just wait until rates come down?”

On this week’s Real Talk Real Estate Podcast, Christina Day and Andy Webb ask the questions nobody wants to say out loud:
What if you wait… and rates keep climbing?
When rates do drop, what happens to the competition for homes?
Why might a higher-rate market be when buyers get more say at the table?
And if you’re renting in Frederick County, what is waiting actually costing you?

One line from Christina you’ll want to remember: you can refinance a rate later… but you can’t refinance the price.

Listen now. 

HOUSE OF THE WEEK: Buttercup Drive, Hagerstown

Under $300K in this market? Andy’s first question was “What’s the catch?” There isn’t one.

2 bedrooms | 2 baths
Attached home with a 1-car garage
Just under 1,200 sq ft
Really wonderful condition
Offered at $275,000

A great fit for a first place, downsizing, or finally getting out of the rent cycle.

Call Jay Day And The Day Home Team at LPT Realty at 866-702-9038 to set up a showing.

#JayDayAndTheDayHomeTeam #DayHomeTeam #LPTRealty #RealTalkRealEstatePodcast #HagerstownMD #FrederickMD #WashingtonCountyMD #FirstTimeHomeBuyer #MarylandRealEstate

Full episode transcript

Lightly edited for readability.

Andy: I'm Andy Webb.

Christina: And Christina Day.

Andy: This is Real Talk Real Estate. Christina, the big news recently was that interest rates did not go the direction everybody was hoping.

Christina: Yeah, they've actually been creeping up. When the Fed increased the prime rate, it isn't a direct correlation to mortgage rates, as we've talked about before. But it did impact interest rates pretty significantly. We were coming out of the six range, something with a six. Now we're something with a seven, and it's looking more like the mid-sevens. It kind of vacillates between the lower and upper end.

Andy: And when people hear that, they tense up.

Christina: They do.

Andy: And you wonder, okay, should I just pause what I'm doing and wait until the time is right? In quotation marks.

Christina: Oh, we hear it all the time.

Andy: You're the people to ask. To pause or not to pause?

Christina: Right. So we hear a lot from buyers who were looking: "I'm going to wait until interest rates come down." Now, back when the market was on fire, we also heard, "I'm going to wait till house prices come down." You can't have both. They are directly correlated.

One of the things I would tell people is that the challenge with interest rates is they vary throughout the day based on the market. What you start out at at 9 a.m. might be very different from what you end up at at 5 p.m., depending on the volatility in the market. They change every single business day. And you never know what economic factors or indicators, or what Wall Street is thinking, will make them go up or down. So we're all sitting here as bystanders, waiting to see what's going to happen.

But here's the risk if you say, "I'm going to wait for interest rates to come down." What if they don't?

Andy: Right.

Christina: What if they keep going up? And they could. It's not unrealistic to think we could end up in the eights. I've been doing this a long time, and I've seen a wide variety of interest rates.

It goes back to what truly had you motivated to buy a house in the first place. Where do you live now? Where do you want to live? And why do you want to make that change? If your motivation is "I want to move out of my parents' house," and you want rates to come down because of affordability, the affordability difference between a month ago and today is not that big. But if you wait and rates keep going up, that is going to change.

Now, the cool thing about rates going up (buyers, listen up): homes are sitting on the market longer, and sellers are facing more competition. Sellers may be more agreeable to taking your offer with some closing help, or things like that you can use to offset your cash out of pocket or to buy down the rate. And when and if interest rates come back down, to whatever number that is, you can refinance. But you've got your house.

If you wait until interest rates go down, what do you think is going to happen to buyer demand?

Andy: It goes the opposite direction.

Christina: And then the house price goes up. But guess what? You can't refinance that house price later. That is what it is.

So my advice to people is: don't let the interest rate scare you away. Work with your lender and your Realtor, and figure out what you're truly comfortable with out of pocket and as a monthly payment. Is there anything out there that fits your reason for moving? If there is, let's go ahead and do it. If rates go down, you can refinance.

Andy: Sure, absolutely. Life is going to life, especially if you need a new place.

Christina: That's the thing.

Andy: You talk about motivation. Some people want, and some people need. They've got to have it.

Christina: And I'll tell you, I feel bad for renters in Frederick County, because the rent here is outrageous. My daughter and her fiancé: I am blown away by what they pay for rent. They have a very nice apartment, but it's a two-bedroom and it's pretty pricey. I can't imagine staying there through another year of increases, and another, and another, all the while saying, "I'm just waiting for interest rates to go down." Meanwhile, the same house you would have bought now keeps going up, and up, and up.

So as soon as they're ready, we're buying a house, whether the rate is seven and a half or eight and a half. I don't care. We're buying a house, because at least the house is secured, and we can work on the rate later if it changes.

Andy: That's smart. I hope that calms people down a little, because like you said, people get tense in these moments.

Christina: Oh, yeah.

Andy: And there's no crystal ball that tells us what things are going to do down the road. You operate with the best information you have now. My worry would be that rates keep going up, and now you're really out of luck.

Christina: Yeah, you're in a tough spot.

Andy: So if people have questions, they can obviously give you guys a call.

Christina: Of course.

Andy: And if they want to check out this week's House of the Week, they can do that as well.

Christina: We have a really great house. It's in Hagerstown on Buttercup Drive, and it's only $275,000.

Andy: Wow. You don't often hear about a house in the two-hundreds. What's the catch?

Christina: It's a cute little attached home with a one-car garage. Two bedrooms, two baths, in really wonderful condition. If you want to take a look, give us a call. We'll be happy to set up a showing and get you in there to take a peek.

Andy: So no catch.

Christina: It's just a great little house. Two bedrooms, two baths, attached, with a one-car garage, and just under 1,200 square feet.

Andy: That sounds like a dream. Check it out online. And if you have questions or want to set up a tour, give them a call at Jay Day And The Day Home Team at LPT Realty. I'm Andy Webb.

Christina: And Christina Day.

Andy: This has been Real Talk Real Estate.