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The Cost of Waiting on Interest Rates to Drop

Do you know how much it’s costing you to wait for interest rates to come down?

Man waiting for interest rates to drop

The days of 3% interest rates are long gone and those who were able to secure one are reticent to ever make a move. Those in a position to move are hesitant due to the higher interest rates. These rates are not predicted to drop below 6% until the end of 2025. If you’re waiting to move until the rates fall, it could cost you more than you think.

Waiting 2 years in the hopes of lower rates can cost you potentially $40,000, depending on your purchase price. Let’s take a look at the numbers.

Graph showing the cost of waiting for interest rates to drop

Say you want to purchase a home that is $500,000. Historically, the average appreciation rate is 4% which would be $20,000. There is nothing on the horizon right now in Ann Arbor that is going to change that, especially with listing inventory currently down 16%. If you buy that home today at a 6.8% interest rate, your payment would be $2,933. If you wait to secure a rate of 5%, which could be 2 years from now, your payment would be $2,415. The difference is $518 a month or $6,216 a year.

In that year, you could have realized $20,000 in appreciation while you saved $6,216 in interest making a difference of $13,784 x 2 = $27,568 in the 2 years you waited for the rates to come down.

Another Thing to Consider

For every 1% the interest rates come down, a buyer can afford 10% more property. So even should the rates fall to 5%, affordability increases motivating more buyers. If you wait for a 5% interest rate, you may pay a higher price because the demand will be so much stronger.

Of course, every potential buyer has a different situation and reason for wanting to move. Whether you’re a first-time homebuyer or have gone through the process before, let’s discuss yours and see if this is a good time to purchase a new home. Contact us today at The Bouma Group, Realtors at 734-761-3060 or and we’ll assess what’s right for you!