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Buy Before Rates Hit 5%


Happy Friday – I hope you are doing well. For this week’s video, I want to discuss why it makes sense to buy a home before rates drop later this year. If you have been watching the market, rates went back up to the mid 6’s last Friday due to the jobs report coming in higher than anticipated. It is now expected that the FED won’t cut rates until May or June so rates will probably stay in the 6’s until that happens. Once the FED starts cutting rates, we should see rates trend back down and potentially get into the 5’s towards end of year.


However, it is going to be better to buy now instead of waiting for rates to drop. The reason for this is our market has an inventory shortage and once rates drop, that will get even worse.  Let’s look at the math. If you have a $400k mortgage and rates drop 1%, that will save you $4k a year. Let’s assume you stay at that higher rate for 18 months. That means the cost of the higher rate is $6k. Due to competing offers once rates drop, you can probably expect to pay 5- 10% more for the property. So, if you are buying a $500k home the cost of that will be roughly $25k - $50k.


All of this assumes you can still afford the home you want with rates being where they are. I do want to make sure you are looking at all the data when deciding on buying now vs later. Please call me if you have any questions.


Stewart Sadler

Managing Partner

Cornerstone Mortgage Group

Georgia Residential Mortgage Licensee: 21412 • Company NMLS: 147913 • Individual NMLS: 147938

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