A critical error when someone says “I am going to buy a home when the interest rate comes down”

Low Interest Rate doesn’t mean Low monthyl Payment

Shocking! isn’t it?

Low interest rate has completely nothing to do with your low payment. Because, low interest rate means the house price is going up.

House prices tend to rise when interest rates go down because of a classic economic principle: supply and demand.

Here's the breakdown:

Lower Interest Rates = More Affordable Mortgages: When interest rates drop, the monthly payment for a mortgage becomes cheaper. This makes homeownership more attainable for a larger pool of potential buyers.

Increased Demand, Limited Supply: With more people able to afford buying a house, demand rises. However, the housing supply typically doesn't increase as quickly. This creates an imbalance where there are more buyers than houses available.

Bidding Wars and Higher Prices: In a competitive market with high demand, buyers may be willing to offer more than the asking price to secure a house. This drives up the overall price of houses.

Essentially, lower interest rates act like a fuel pump for buyer demand, which can push home prices higher.

It's important to note that this is a general trend, and the housing market can be influenced by other factors as well. However, the relationship between interest rates and house prices is a significant one to consider when making home buying decisions.