Rates, the Fed and the Election: What Waiting Is Really Worth

The script

For social, email, or a client conversation

If you’ve been thinking about buying but want to wait for rates, the Fed or the election, that’s a fair instinct, and it helps to know what each one really means for you. The average 30-year rate in Freddie Mac’s weekly survey was 7.40 percent last Thursday. That’s an index reading rather than a quote, and it’s more than a point higher than a year ago. If rates move by a quarter point, the principal and interest on a $400,000 loan changes by about $68 a month. That’s real money, and it’s worth seeing at its actual size. If rates ever fall meaningfully after you buy, a refinance is something you can look at, though it comes with its own costs.

The Fed’s meeting at the end of this month sets the short-term rate banks charge each other, not mortgage rates. Mortgage rates tend to follow the bond market, which reacts to inflation and economic news every day, so a decision people already expect is usually reflected in rates before it’s announced. And no one can reliably tell you what an election will do to rates or home prices.

What you can see clearly is the market in front of you. In Raleigh last month, the typical home took 44 days to sell, about 45 percent of homes for sale had a price drop, and the median sale price was a little lower than a year earlier. That gives buyers room to talk about price, repairs and help with closing costs. Waiting can be the right call, and if it is, I’d like it to be one you made with the numbers in front of you. If you’d like to see yours, I’ll put them together with my lender partner, Patrick Gallagher at Exhale Lending.

What a rate move is worth

Principal and interest on a 30-year fixed loan

What buyers have right now

The city of Raleigh in September, plus the national picture

Prices and conditions vary a lot by neighborhood and price range, and none of this says where prices or rates go next. It does show that buyers who are ready have room to negotiate today.

Three short answers

For when a client says “let’s wait”

• “We’ll wait for rates to come down.” Nobody can reliably time rates. Show what a quarter point is worth on their loan so they can weigh it against the home and the terms they could negotiate today.
• “Let’s see what the Fed does.” The Fed sets a short-term bank rate, not mortgage rates. Mortgage rates move with the bond market every day, and an expected decision is usually priced in before it’s announced.
• “Let’s wait until after the election.” No one can say what an election does to rates or prices. What shapes our local market, like jobs, inventory and local demand, doesn’t reset overnight.

The buyer text

Ready to send