The Homebuyer Trade-Off: Better Rates or Better Deals?

If you’ve been keeping an eye on mortgage rates, you may be wondering whether now is the right time to buy. With rates climbing above 7% earlier this year, many buyers have chosen to hold off, hoping borrowing costs will eventually come down.

But mortgage rates are just one piece of the puzzle. When buying a home, there’s often a trade-off between lower interest rates and stronger negotiating power. Getting both at once is uncommon. And in today’s market, buyers may have more leverage to negotiate a better deal than they realize. Is this conversation helpful so far?

Why Lower Mortgage Rates and Buyer Negotiating Power Rarely Go Hand in Hand

Think back to 2020 and 2021, when mortgage rates hovered around 3% and buyers flooded the housing market. While those historically low rates made homeownership more affordable, they also created intense competition. With so many buyers competing for a limited number of homes, finding and securing the right property became much more challenging.

As a result, homes frequently attracted multiple offers, buyers often bid above asking price or waived inspections, and sellers had the upper hand in negotiations. Jake Krimmel, Senior Economist at Realtor.com, highlights just how heavily the market favored sellers during that time:

“By spring 2022, sellers held the advantage in 98 of the nation’s 100 largest metro markets, following two years of mortgage rates hovering around 3%.”

During the second half of 2022, mortgage rates began climbing, causing buyer demand to slow and housing inventory to increase. As competition eased, the market gradually shifted away from sellers and started giving buyers more negotiating power. Today, that shift has become much more apparent.

According to a recent Realtor.com report, 66 of the nation’s 100 largest metro areas now favor buyers, highlighting how much the housing market has shifted (see graph below):

While lower mortgage rates may be appealing, today’s shift toward a buyer-friendly market comes with advantages of its own.

How Buyers Can Take Advantage of Today’s Negotiating Power

Housing inventory has reached levels not seen in years, giving buyers more options and greater flexibility in their home search. With more properties competing for attention, sellers may need to be more accommodating to attract serious buyers and secure a sale. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:

“With more homes available and properties spending longer on the market, buyers are gaining greater leverage in negotiations.”

That increased negotiating power is translating into real savings for homebuyers. According to Redfin, nearly half of buyers are now receiving some form of seller concession, whether it’s assistance with closing costs, credits toward repairs, or contributions to help lower their mortgage rate through a buydown (see graph below):

So, if you find a home that checks all your boxes but mortgage rates aren’t quite where you’d like them to be, you still have options. Negotiating a lower purchase price or asking the seller to contribute toward a mortgage rate buydown could help make your monthly payments more manageable and offset some of today’s borrowing costs.

How Waiting for Lower Mortgage Rates Could Work Against You

If you’re planning to wait until mortgage rates come down before buying, there’s something worth considering. Forecasts from Fannie Mae, the Mortgage Bankers Association (MBA), and Wells Fargo suggest mortgage rates are unlikely to decline significantly through 2027. That means waiting may not deliver the savings you’re hoping for (see graph below):

Here’s what buyers need to keep in mind. If mortgage rates were to drop significantly, more buyers would likely jump back into the market. That increased competition could mean fewer opportunities to negotiate, fewer seller concessions, and a shift in negotiating power back toward sellers.

The bottom line? Waiting for lower rates could come at a cost. You may secure a better interest rate later, but you could lose the negotiating advantages available to buyers today.

That doesn’t mean you should rush into buying a home. The timing needs to make sense for your financial situation and long-term goals. But if you have a genuine reason to move, the negotiating power available in today’s market could help you secure a better deal and make homeownership more affordable, even with current mortgage rates.

Bottom Line

Lower mortgage rates and strong buyer negotiating power rarely happen at the same time. While rates may not be ideal, today’s market offers opportunities to negotiate a better deal.

If you’re considering buying a home, let’s connect and explore properties where sellers may be willing to offer closing cost assistance, mortgage rate buydowns, or other incentives that could help make your next home more affordable.