I’ve been working with a client for about three years, trying to find the perfect home that checks all the boxes on a very specific list. No problem — my job is to help buyers find that perfect home.
But muddying this particular situation is a firm belief by the buyer that mortgage rates are going to return to pandemic-era levels, when a 30-year fixed rate bottomed out at under 3%. Post-COVID, from early 2023 to today, mortgage rates have hovered between 6.5% and just over 8%; at the time of this writing, the rate for a conventional 30-year fixed mortgage was 6.74%.
I don’t think the mortgage rate will dip below 5% again in my lifetime, and here’s why: Mortgage rates during COVID were artificially deflated in an effort to keep the housing market running during the shutdown. That’s why real estate professionals were deemed essential workers during the pandemic. Mortgage rates naturally had to go up to rebalance the market in the wake of COVID. (Conversely, I also don’t think we’ll ever see — or at least I hope we’ll never see — mortgage rates as high as they were in the early 1980s, when homebuyers paid upwards of 18.5%.)
My advice? The mortgage rate is likely to fluctuate between 6% and 7% for the foreseeable future. So if you find a house you love that’s within your budget, make an offer now at the current mortgage rate. Then, if rates do end up taking a dip, refinancing is always an option.
Keep in mind that even if mortgage rates come down (either slightly or significantly), home prices will keep going up — which means that by waiting, you could wind up pricing yourself out of the market. Right now, homes in south-central Wisconsin listed at $400,000 or lower are selling fast, with offers of $20,000 or more over asking price losing out to even higher offers.
I know all of this can be confusing, and I’m here to walk you through the numbers and help you make an informed decision.
