Just when it seemed like mortgage rates might finally be settling down, they're moving higher again.
If you're thinking about buying or selling a home, I know it's tempting to watch every little change and wonder whether you should do something—or wait.
Should buyers hold off until rates come back down?
Should sellers worry that higher rates will push buyers out of the market?
Those are fair questions. But I think there's a better way to look at what's happening.
First, What's Going On With Mortgage Rates?
The average 30-year fixed mortgage rate was 6.76% last week, according to Freddie Mac. That's up from 6.65% just a few weeks earlier.
And there's been more movement in the financial markets this week that could put additional pressure on mortgage rates.
You may have seen headlines about the 10-year Treasury yield climbing above 5%. That's important because mortgage rates tend to move in the same general direction as longer-term Treasury yields.
There's also a lot of attention on the Federal Reserve this week, with economists widely expecting another increase in its benchmark interest rate.
But here's something that's worth understanding:
The Federal Reserve doesn't actually set mortgage rates.
Mortgage rates are influenced by a number of things, including inflation expectations and what's happening in the bond market. That's why mortgage rates can start moving before the Fed ever makes an announcement.
For someone buying or selling a home, though, the mechanics aren't nearly as important as the effect.
And that effect comes down to affordability.
Buyers Don't Really Shop by Price. They Shop by Payment.
This is something sellers sometimes overlook.
Let's say you're selling your home for $500,000.
You may be focused on whether $500,000 is the right price.
The buyer is thinking about something different.
They're thinking:
"What is this house going to cost me every month?"
And when mortgage rates move, that number changes—even though your asking price hasn't.
For example, on a $400,000, 30-year mortgage, principal and interest would be approximately:
6.25% — $2,463 per month
6.75% — $2,594 per month
7.25% — $2,729 per month
That's a difference of about $266 every month between 6.25% and 7.25%.
Add property taxes, homeowners insurance and possibly HOA dues, and you can see why buyers are paying such close attention to affordability.
So Should Buyers Wait?
Maybe.
But I wouldn't make that decision based solely on the hope that mortgage rates will be lower six months from now.
We've been waiting for a meaningful decline in rates for quite some time, and predicting exactly where they'll go next has proven difficult.
If rates fall substantially, that's obviously good for affordability.
But lower rates can also bring more buyers into the market. And more buyers can mean more competition for desirable homes.
Right now, buyers in our local market generally have something they didn't have much of a few years ago:
time and negotiating power.
There are more homes to choose from. Properties are taking longer to sell. And depending on the home and the seller's circumstances, buyers may have opportunities to negotiate on price, repairs, closing costs or even a contribution toward buying down their mortgage rate.
That doesn't make a 6.75% mortgage inexpensive.
But it's part of the equation.
What About Sellers?
This is where I think today's interest-rate environment is particularly important.
Higher mortgage rates don't necessarily mean there aren't buyers for your home.
Recent Asheville-area numbers show that buyers are still buying.
But they're being more selective.
And when buyers have more inventory to choose from while also dealing with higher monthly payments, pricing becomes even more important.
A seller might think a $20,000 or $25,000 difference in asking price isn't significant.
To a buyer trying to keep a monthly payment within a particular budget, it may be very significant.
That's why I'm not a fan of intentionally pricing a home high just to "see what happens" in today's market.
You don't want buyers eliminating your home from consideration before they ever walk through the door.
There May Be More Ways to Make a Deal Work
One positive thing about a more balanced market is that price isn't necessarily the only negotiating tool available.
For the right transaction, sellers may be able to help a buyer with closing costs or contribute toward a mortgage-rate buydown.
A buyer may decide that getting some help with upfront costs is more valuable than negotiating another few thousand dollars off the purchase price.
Every transaction is different, of course. What makes sense depends on the buyer, seller, lender and property.
But this is where having a good lender and experienced real estate professionals involved can make a real difference.
Instead of looking only at the price, we can look at the whole transaction and ask: Is there a way to structure this that works for everyone?
Don't Let One Number Make the Decision for You
Mortgage rates matter. There's no getting around that.
But I don't think buyers or sellers should allow one number to dictate an entire real estate decision.
For buyers, I'd ask:
Can I comfortably afford the home and payment at today's rate?
If the answer is no, that's important. Waiting may absolutely be the right choice.
But if the answer is yes, I'd also consider the advantages available in today's market—the inventory, negotiating opportunities and ability to take a little more time making a decision.
For sellers, I'd ask:
How does my home fit into what today's buyer can actually afford?
That means looking beyond what your neighbor sold for a few years ago or what you hope to net from the sale. It means understanding the competition, today's financing environment and what buyers are actually willing to pay.
The Bottom Line
There will always be a reason to wonder whether next month might be a better time to buy or sell.
Maybe mortgage rates will fall.
Maybe they'll rise.
Maybe home prices will change.
None of us can predict those things with certainty.
What we can do is look carefully at the market we have today and make informed decisions based on your individual circumstances.
If you're buying, that means finding a home and monthly payment that make sense for you.
If you're selling, it means pricing and positioning your home for the buyers who are actually in the market today.
And if you're not sure what any of this means for your particular situation, that's exactly the kind of conversation I'm happy to have.
Because guiding people home isn't about predicting the market perfectly. It's about helping you make the best decision with the information we have today.
