Should I Buy A Home Now Or Wait Until Interest Rates Are Lower?

Knowing when to invest and when to wait is a strategy that can save you lots of money. This is especially true when you are thinking about buying a home. The staying power of property will make you money, not playing the game of the market and when it fluctuates. Even if interest rates go down, will the cost of a home increase so much that you still pay more than you would at today's interest rates? That is one of the variables many potential buyers overlook. It makes sense you want the best deal on the property you buy. A long-term loan can mean plenty of interest paid if the rates are high.

Home Interest Rates Of 2023 Compared With 2024

Around September and October 2023, we noticed interest rates increasing. They went from 3.25% to 3.75% in a short time, which caused many buyers to panic who were searching for a home to buy. They decided to wait until 2024 when the interest rates went down.

The problem, though, is that the rates kept going up while, at the same time, the average price of a home increased. Consumers are paying more for property and interest in buying a home in 2024 than in the early part of 2023.

In hindsight, many of these potential buyers regret their decision to wait. They wish they would have pursued and completed the homebuying purchase when the rates were below 4%. They also realize they have lost out on the equity that would have been building up each month if they had completed that purchase.

Today, the Bank of Canada has an interest rate of 4.5%, and it could move down another 25 basis points in September.

Look At More Than Interest Rates

While looking at interest rates on a home before you buy is essential, there are more variables than that to factor into the decision. When the rates fall, the market will be filled with potential buyers waiting for that to happen. However, they didn't realize this demand for homes would drive up prices. The prices can increase by thousands of dollars, which means paying more for the house—even with lower interest rates.

Potential buyers will find that homes aren't on the market for long and selling for a premium price. Bidding wars on homes can be disappointing and leave potential buyers empty-handed. They can also cause potential buyers to offer a price that pushes their budget to the limit.

Buying when the market is balanced is encouraged. Sure, the interest rates are higher, which can be disappointing, but you can make a reasonable offer on a home and buy it for less than you could last year in many neighbourhoods. When you crunch the numbers, you still come out ahead.

Buy Now And Refinance Later

You may need a home now; buying a home is cheaper per month than paying rent in many locations. Rather than holding out for interest rates to drop, consider purchasing now and refinancing later. Work with a professional real estate agent who can help you negotiate the best deal on the home you buy. They can help you get a lower price than what is being asked, which can save you money immediately!

Keep an eye on the interest rates after you buy a home. If rates change while you recently committed to purchasing a house, you should be able to get the lower rate. This will lower the interest on it and give you a lower monthly payment. Talk to a business professional or a lender to help determine how much you will save.