Why timing beats headlines in housing
Headlines love neat stories: “3% inflation, rate cuts coming, housing to the moon.” Maybe. But in housing, the when usually matters more than the what. Your monthly payment is set the week you lock, not by the yearly average economists quote on TV. I’ve sat across too many kitchen tables to count where a 48-hour rate swing made or broke a deal. It’s annoying, I know, but that’s the game.
Two quick numbers to make this real. First, mortgage rates don’t move in tidy straight lines. During CPI prints and Fed weeks, 30-year fixed quotes can jump 25-50 bps in a couple of days. That’s not theory; it’s been normal on and off since 2022. On a $400,000 loan, a 50 bp move changes principal & interest by roughly $130-$150 per month (7.25% vs. 6.75% is about that spread). Second, for buyers constrained by debt-to-income, that same 50 bp swing shifts max purchase power by ~5%, which is the difference between winning the house you want and settling for the one with the 1998 kitchen.
Seasonality is the quiet co-author of every offer you write. Q4 usually brings softer listings and fewer bidding wars, but also fewer sellers. Realtor.com’s historical trend data shows new listings typically fall 20-30% from summer peak into December (multi-year average), and that’s exactly what we’re beginning to see again this fall. Translation: you might catch a price that’s 1-2% more negotiable, but you’ll have half the choices. I’ve had buyers snag a discount on December 28th because the seller wanted it off their books before year-end; I’ve also watched folks wait for January and miss the only good 3-bed under $600k in their zip code for three months.
About that “3% inflation + rate cuts” story. It sounds bullish for prices, but mechanics matter. If inflation runs near 3% and the Fed trims rates later this year, mortgage pricing still depends on the bond market and mortgage spreads. The primary-secondary spread (what lenders charge over MBS yields) was unusually wide in 2023, around 140 bps on average and even higher at peaks, versus roughly 100-120 bps back in 2018-2019. It narrowed at times in 2024 and this year, but it’s still not back to the old normal. So yes, cuts can help, but if spreads stay sticky or growth data wobbles, the pass-through to your 30-year quote may be smaller than the headline implies.
Rates and inflation set the background; inventory and timing set the price you actually pay.
Where are we right now, practically speaking? Inventory remains tight by long-run standards. NAR data kept months’ supply under 4 for most of last year, and 2025 has bounced in the mid-3s to low-4s depending on the month and market, better than 2023, still lean versus history. That tight supply means the specific week you shop (and whether two competing buyers are on vacation) can matter more than whether CPI printed 3.0% or 3.3%.
Here’s what we’ll tackle next: how to time your lock around volatility windows, how to use Q4 seasonality without getting trapped by thin inventory, and how to read the rate-cut + 3% inflation narrative without getting front-run by spreads. We’ll stay concrete, what to watch on the calendar, how much payment risk a 25-50 bp wobble really adds, and when it’s worth waiting a week (or not). And yea, I’ll show you where I’ve personally stepped on rakes so you don’t have to.
3% inflation + Fed cuts: what that actually means for monthly payments
Short version: if inflation sits near ~3% and the Fed trims policy rates later this year, 30-year mortgage rates can ease, but not in a straight line and not one-for-one with the Fed. Mortgages hug the 10-year Treasury plus a spread. Cuts help by calming recession risk and volatility (spreads compress), and the 10-year usually drifts lower if markets believe inflation near 3% sticks. The practical question is: how much does that move your payment?
Rule-of-thumb I use on the desk: a 1 percentage point drop in mortgage rates boosts purchasing power roughly 10% for the same monthly principal-and-interest payment. Half a point (~50 bps) is about 5%. It’s not perfect, but it’s close enough to plan.
Back-of-envelope: Payment factor per $1,000 at 30-yr fixed is ~6.99 at 7.5%, ~6.32 at 6.5%, ~6.16 at 6.25%. That’s your quick conversion.
Context matters. Last year, 30-year fixed rates hovered roughly 6.5-7.5% (Freddie Mac PMMS, 2023-2024). This year we’ve chopped around those levels depending on data weeks. If the combination of 3%-ish inflation and late-2025 Fed cuts knocks mortgage rates down 50-100 bps from a 7% handle to the low-6s/high-5s, buyers feel it immediately, even if home prices don’t budge a dime.
- Same payment, more house: Say your budget is $2,700 for principal + interest. At 7.25%, that buys about $395k of principal. At 6.25%, it stretches to roughly $438k. That’s +10-11% purchasing power without changing your monthly nut.
- Same house, lower payment: On $400k, the monthly P&I at 7.25% is about $2,729. At 6.25%, about $2,463. Call it a ~$265/month swing, which is your utilities or a decent chunk of HOA. At 6.5% it’s around $2,529, still ~200 bucks better than 7.5% (~$2,797).
- Prices don’t have to rise for you to feel richer: A 50-100 bp drop tightens the payment belt automatically. That’s why slow winters with falling rates can quietly reset budgets.
And here’s the human wrinkle. Sellers read the same headlines. If rates tick down, more buyers show up the next weekend; some sellers lift list prices or get bolder on counters. I’ve literally had a deal where 25 bps of rate relief saved my client $120/month and then we “donated” half of it back to win the bid. That’s fine, just budget like you won’t keep every dollar of rate relief in a tight block.
But don’t overthink the macro lecture. If inflation hangs near 3% and the Fed trims later this year, you mainly watch two things: the 10-year Treasury level and the mortgage spread. We’ve lived for 18 months with spreads wider than the old normal; if recession odds cool and MBS liquidity stays steady, spreads can narrow a bit, letting 50-100 bps of relief show up in rate sheets. It won’t be perfect. Some weeks you’ll see the 10-year down 10 bps and your lender moves 3. That’s the spread doing what it wants.
Bottom line real-world math, without the econ sermon:
- Use 10% per 1% rate move as your budget guide.
- Compare against last year’s 6.5-7.5% range (Freddie Mac, 2023-2024) to set expectations.
- If we slide from ~7% to ~6% later this year, a $600k target becomes ~$660k for the same payment, or the same $600k gets about $300/month cheaper on P&I. You feel that immediately, even if prices don’t blink.
Inventory is still the bouncer at the door
Inventory is still the bouncer at the door. Rates get the headlines because they move every day and hit your payment instantly, but inventory sets the vibe of the whole room. Even if we get the 50-100 bps of relief we talked about earlier, a thin for-sale shelf can keep prices sticky, or nudge them higher, because every marginal buyer runs into the same limited choices. I’ve lost too many Saturdays at open houses with 14 offers to pretend otherwise. You can feel it in the first five minutes: two decent listings, a dozen serious buyers, and the agent’s sign-in sheet looks like a PTA roster.
Let me anchor that with actual supply math. The National Association of Realtors reported months’ supply sitting near a tight 3 months through much of 2023, and still around the low-3s for stretches of 2024 (NAR, 2023-2024). A balanced market is closer to 5-6 months. At ~3, any demand impulse from lower rates is amplified. Drop mortgage rates by 1% and you expand budgets by ~10%, great, but if inventory doesn’t refill, the extra capacity chases the same listings, and you know how that movie ends. Prices don’t have to sprint; they just don’t discount.
The lock-in effect is the silent doorman. Homeowners sitting on pandemic-vintage loans simply don’t list unless life forces it. Freddie Mac quantified this back in 2023: roughly 61% of outstanding mortgages carried rates under 4%, and about 92% were under 6% (Freddie Mac, 2023). That math hasn’t magically reset in 2025. Even with some rate relief this year, a big slice of owners still look at their sub-4% note and say: not moving, not today. Which keeps resale supply scarce.
New construction helps, but it’s not a firehose. Builders stepped into the vacuum in 2023 and 2024; Redfin noted that around 30% of the single-family homes for sale were new builds at points in 2023, well above the historical share (Redfin, 2023). That’s useful, builders can actually create supply, but two caveats matter: they tend to build where they can permit and profit, and the product skews above entry-level in many metros. Yes, incentives and rate buydowns sweeten the deal, but the price points don’t fully solve for first-time buyers. I’ll come back to that price-mix point in a second.
Actually, quick clarification on the rate math from earlier: a move from ~7% to ~6% later this year can give you roughly 10% more buying power, or a ~$300/month P&I break on a $600k target. That helps demand right away. But if months’ supply is still sitting near 3 and lock-in keeps resale trickling, the relief mostly lands in faster absorption and fewer price cuts, not big discounts. That’s why you get bidding clusters whenever a clean, well-located listing shows up under the metro median.
On the builder mix I said I’d circle back to: the median new home often prices above existing, and while 2024 saw some narrowing at times, the general pattern still holds (Census/NAR, 2024). So yes, new supply eases pressure, but it doesn’t fully reset affordability at the entry tier. You feel it in the townhouse segment and the 3-bed/2-bath 1,600-2,000 sq. ft. sweet spot, still tight, still competitive.
Bottom line from my seat: until months’ supply moves closer to 4-5 on a sustained basis, or lock-in loosens because more owners refinance to a rate that makes trading up/down less painful, inventory will keep acting like the bouncer. Rates can shorten the line, but the door policy hasn’t changed.
Demand engines: incomes, investors, and credit standards
Affordability isn’t just the 30-year rate quote, it’s the paycheck behind it and the gatekeepers in underwriting. On the income side, wage growth is doing some work but not heroic work. BLS has Average Hourly Earnings running about 4% year over year in 2025, while headline CPI has cooled to roughly 3% this year, so real wages are slightly positive again. That helps. But the payment side is still heavy: ICE/Black Knight data last year showed the mortgage payment-to-income ratio near the high-30s percent for a median buyer with 20% down (2024), and even with rates easing from around 7.5% earlier this year to roughly 6.6-6.9% lately, most metros still screen in the mid-to-upper 30s. That’s where the rubber meets the road for first-time buyers, DTIs get tight fast when taxes, insurance, and student loans are in the mix.
Here’s the twist that gets missed: investors and second-home buyers don’t wait for the all-clear. They tend to buy the dip in rates, not after it. Redfin’s tracking showed investors at roughly the mid-teens share of purchases in 2024, with a heavier tilt toward lower-priced segments. NAR data has second-home/vacation purchases floating in the low single digits of existing sales in 2024. Point is, when mortgage rates take a leg lower, even a modest one, that group shows up first with cash or ARMs or creative capital structures, and they’ll front-run retail buyers, particularly on entry-tier listings that pencil for rent. I’ve watched this movie since the 2010-2012 vintages; the act hasn’t changed much.
Credit standards are the other throttle. The MBA Mortgage Credit Availability Index is still tight by historical standards, around the mid-90s in mid-2025 versus ~185 back in 2019 (MBA). That’s a big gap. Lenders remember early 2022-2023 repurchase headaches and are keeping overlays in place: FHA 31/43 is still the anchor, but a lot of agency production is functionally capped near 45% DTI unless there are strong compensating factors. If those overlays stick, lower rates don’t instantly translate into more locked loans; the demand response is slower, stickier. You feel it in preapproval fallout and in the number of buyers who “like the house” but can’t quite clear AUS with their current debts.
If credit boxes stay tight, rate cuts feel like easing the gas while the parking brake is still half on.
So, how does this stack up right now?
- Wages vs payments: Real pay up a bit, but payment-to-income still around the high 30% range in many metros (2024-2025). That keeps first-time buyers rationed.
- Investor/second-home demand: They react fast to rate dips and to softer comps, often grabbing entry-level or rent-ready homes before retail buyers reload.
- Credit standards: MCAI tight relative to 2019. If lenders hold DTIs and overlays, the spring-back in demand from rate cuts is more of a grind than a snap-back.
Net-net from my seat today in Q4: if the Fed trims again later this year and 30-year rates edge closer to the low-6s, you do get more traffic and better conversion, but unless underwriting eases a bit and wages keep outpacing inflation, the demand lift arrives in waves, not a flood. And yes, same point said another way, the buyers show up, just not all at once.
Regional reality check: not all zips care about the Fed equally
Housing is local, painfully local, and rate cuts don’t splash evenly across the map. The same 50-75 bps of mortgage relief lands very differently in San Jose than in San Antonio. A couple of grounding facts to keep our compass straight: the 30-year fixed peaked at 7.79% in Oct 2023 (Freddie Mac PMMS) and has been cycling lower this year, with prints hovering in the mid-to-high 6s in recent months. Also, the conforming loan limit was $766,550 in 2024 (FHFA), coastal buyers routinely blow past that, which pulls them into jumbo, with different pricing and overlays.
High-cost coasts (Bay Area, SoCal, NYC, Boston): These markets are the most rate-sensitive because loan sizes are big and inventory is sticky. Jumbo share tells the story: in several California coastal counties, more than half of purchase loans in 2024 were jumbo, versus a national jumbo share that’s typically around the high-teens to ~20% (MBA application mix, 2023-2024 range). When rates ease 50-100 bps, the monthly-payment delta on a $1.2-$1.5 million mortgage is meaningful, think hundreds of dollars a month, which can unfreeze move-up demand. But two frictions matter here: (1) appraisal risk in thin-comp markets (multiple unique properties, fast-moving prices) and (2) jumbo pricing/overlays that don’t always pass through Fed moves 1:1. Net effect: cuts do lift transaction volume first, then prices, though the appraisal/underwriting gate can slow the second step.
Sun Belt growth corridors (Austin-San Antonio, DFW, Tampa, Jacksonville, Phoenix): Supply is more elastic, but household formation is strong. Texas and Florida together accounted for roughly 30% of U.S. single-family building permits in 2023 and about that scale again in 2024 (Census permits data). New construction has also been a bigger share of what’s actually on the market, roughly one-third of active listings nationwide in parts of 2023-2024, with Sun Belt metros running hotter than that (various listing services and builder reports). Translation: builders can respond, quickly, when mortgage rates dip, especially if buy-downs get cheaper to fund. Even with more rooftops coming, rate cuts can still firm prices because the demand base is growing (net in-migration + job growth) and new-home incentives narrow as financing costs fall. Expect price gains to be moderate but broad when rates slide; the lever shows up in absorption times and incentives first, then in base prices.
Midwest and smaller metros (Cincinnati, KC, Des Moines, Cleveland): These markets tend to run steadier. Land is more available, construction costs pencil a bit cleaner, and payment-to-income ratios are lower than coastal peers. In 2024, many Midwestern metros sat around 3-4x median price-to-income versus higher 5-7x ratios in coastal markets (various metro affordability trackers). Inventory is often less constrained, months of supply can sit closer to “balanced” territory, so a 50 bps rate cut shows up more as incremental volume and a gentler price slope rather than a price spike. Think: fewer bidding wars, more contingent offers getting accepted, and smaller appraisal gaps.
Quick human note, because this gets abstract fast. If you’ve ever tried to comp a 1920s Chicago bungalow and then a Phoenix 2015 build on the same day, you know the mechanics aren’t the same. Rate sensitivity is higher where the mortgage is bigger and comp sets are choppier; it’s lower where builders can add supply and the payments start lower to begin with. Sounds obvious, but it’s the through-line.
How cuts may flow through by property type:
- Entry-level/new-build in the Sun Belt: Faster pass-through to absorption; builders can trim buy-downs and push base prices once backlog turns. Watch incentive dollars per door, those shrink first.
- Coastal condos/townhomes: Big payment relief, but HOA/insurance assessments and jumbo underwriting can blunt the upside. Price response is uneven across buildings.
- Midwest SFH resale: More stable path; rate cuts nudge DOM lower and lift transaction counts. Price prints edge up, not surge.
If that sounds messy, it’s because it is. Rates set the stage, but local supply elasticity, jumbo thresholds, and appraisal math decide the plot. Broadly: coasts get the biggest pop in activity (and then prices), Sun Belt firms up on better absorption with measured price gains, and the Midwest hums along, with fewer fireworks and fewer hangovers.
What the numbers might look like: three practical scenarios
No crystal ball here, just clean bands you can actually budget around. Quick context so we’re grounded: the 30-year fixed peaked near 8% in October 2023 (Freddie Mac weekly survey). Since then, rate volatility has been the headline risk, but the math hasn’t changed, about every 50 bps drop in mortgage rates cuts the principal-and-interest payment roughly 5-6% on a standard 30-year fixed. Or said another way (I almost said “rate elasticity,” sorry): a 1% rate move tends to shift purchasing power about 10-12%, depending on price point and DTI. Keep that in your back pocket while we map the cases.
One quick correction to myself before we go on: when I say “payment,” I’m talking P&I. Taxes, insurance, and HOA fees are their own animals and can dilute the benefit in certain buildings or metros.
Base case (our house view): modest cuts, rates ease ~50 bps
• Mortgage-rate band: 6.25-6.75% on the 30-year fixed, call it by early winter if the tape cooperates.
• Price path: Stabilization to +2-4% year over year in tight coastal and job-heavy metros; flat to +2% in most other markets.
• Why this holds: Even a half-point trims payments ~5-6%, which is just enough to unstick move-up sellers and boost absorption without sparking a frenzy. Inventory stays thin but not vanishing.
• Buyer playbook: Lock if you see sub-6.5% with a free float-down; prioritize properties on market 21-45 days where sellers blink first. Buy-downs from builders shrink before list prices rise, watch that line item.
• Seller playbook: Price to comp and pre-negotiate a small rate buydown (1-2 points). It’s cheaper than a 3% price cut and reads better online.
• Investor angle: Underwrite to steady rent, modest cap-rate compression (10-20 bps). Value-add with short renovation cycles wins because time-on-market is improving but still finite.
Soft-landing case: ~100 bps down, activity pops
• Mortgage-rate band: 5.50-6.00%. Purchase apps climb and multiple-offer velocity returns, not 2021-crazy… but busy.
• Price path: +4-7% where inventory is thin (think desirable school districts, transit-access suburbs, mid-tier SFH in the West); +2-4% most elsewhere.
• Why this holds: A full point lower boosts purchasing power ~10-12%. That pulls fence-sitters in and unlocks trade-up chains. Days-on-market compress materially.
• Buyer playbook: Get fully underwritten, not just pre-qualified. Use appraisal gap reserves or rate caps in offers, speed beats finesse here.
• Seller playbook: Price slightly ahead of comps if traffic is real (you’ll feel it the first weekend). Skip outsized concessions; offer a targeted 1-0 buydown to widen your buyer pool.
• Investor angle: Expect tighter spreads on turnkey. Lean into off-market or hairier fixes. If you model IRR, sensitivity-test exit cap rates 25 bps higher than your base, just in case the party is shorter than it looks.
Sticky-inflation case: minimal cuts, rates hold
• Mortgage-rate band: 6.75-7.25%. Affordability bites, activity stays choppy.
• Price path: Prices drift within ±2%. Discounts deepen on stale listings (45+ days), while clean, well-located homes still clear near ask.
• Why this holds: Payments don’t move enough to change budgets. Sellers with sub-4% legacy loans keep sitting tight. Absorption weakens in higher-HOA/insurance corridors.
• Buyer playbook: Target day-30 to day-60 listings; ask for 2-3 points in credits instead of headline price cuts, it delivers bigger monthly relief. Consider assumable loans where available.
• Seller playbook: Pre-inspect, correct obvious issues, and price to win the first 14 days. If you miss, pivot fast with credits; don’t chase the market down in $5k increments.
• Investor angle: Cash-on-cash takes priority over pro-forma appreciation. Underwrite higher capex and insurance. Focus on yield, not beta.
Circling back to the data touchstone, yes, rates were near 8% in late 2023 (Freddie Mac), and that’s the ceiling we’re using for context. The scenario bands above translate that history into budgets you can actually run this quarter. If I squint at the tape this year, the base case is still the most probable. But, and this is the key, your micro-market can break the tie: a 100-unit Sun Belt subdivision with active incentives behaves very differently than a 3-bed colonial near a top-tier commuter rail stop. Same 50-100 bps move, different outcome.
So, will 3% inflation and cuts lift prices? Here’s the honest take
So, will 3% inflation and cuts lift prices? Here’s the honest take. Short answer: in tight markets, yes, often faster than you notice. When inflation cools toward ~3% and mortgage rates ease, demand wakes up before inventory adjusts. We saw a version of this after the late-2023 rate peak: the 30-year fixed brushed ~7.8-8.0% in October 2023 (Freddie Mac PMMS), then every 50-75 bps downtick pulled more buyers off the sidelines. Pair that with lean supply and you get firm-to-rising prices, sometimes even with meh listing quality.
Context helps. The market was chronically undersupplied for years, and even last year the industry’s own yardstick said we weren’t balanced: NAR put months’ supply around ~3.3 in mid-2024, well below the 5-6 months that typically marks a steady, no-drama market. That’s your clue. If rates drift down while CPI hangs near 3% (BLS had year-over-year CPI bouncing around the low-3s in mid-2024), it lowers the monthly nut and unlocks pent-up demand faster than builders can add units in a lot of zip codes. Not everywhere, but in the cul-de-sacs with good schools and short commutes? Yeah.
Payments drive behavior. If you’re holding 7-10 years, which, honestly, most people end up doing, your monthly matters more than the sticker. Quick math: a $400k loan at 7.5% is about $2,797/month P&I; at 7.0% it’s ~$2,661; at 6.5% it’s ~$2,528. That’s $136-$269 a month back in your pocket. Price can even drift up a few percent and your payment is still lower if rates cooperate. It’s a little counterintuitive when you’re staring at the list price on Redfin at 11pm, I get it.
Now, the caveats, because they matter. If rates ease but credit stays tight (DTI overlays, LLPAs biting high-LTV borrowers) or if local inventory unlocks, think rate-lock fatigue finally breaking, or a builder dumps spec homes with incentives, the price lift gets muted or delayed. Same 50-100 bps move can land totally differently in a 100-home subdivision with standing inventory versus a 3-bed colonial near the express train. I’ve watched that movie.. more than once.
My base case: lower rates with ~3% inflation firm prices where supply is tight, and they often nudge up before you feel it. But it’s path-dependent and, annoyingly, micro-market specific.
Tactically, your edge is timing and preparation, not heroics:
- Be pre-approved and rate-lock ready. Use a lock with a float-down option. If pricing improves before you close, you get the lower rate. When I see volatility spike, these save deals.
- Watch weekly inventory and price cuts. Track active listings, new pendings, and reductions at the ZIP level. If weekly actives flatten and pendings jump, that’s your early tell that prices may firm in 2-4 weeks.
- Set walk-away numbers. Decide your max payment and back into a ceiling offer. If bidding passes that, you’re out, no “one more $5k” creep. Your future self will thank you.
- Be willing to buy the boring-but-fair listing. The clean, slightly dated house with new roof and average photos? That one often prices rationally while the shiny flip gets 12 offers.
One more thing I almost skipped, if rates dip and you wait for proof in the comps, you’re usually chasing. Prices don’t always gap up, but the good stuff goes first. If you’ve done the math on a 7-10 year hold, the monthly affordability win is the signal. Everything else is noise, or, well, mostly noise.
Frequently Asked Questions
Q: How do I time a mortgage rate lock when CPI and Fed weeks can move quotes 25-50 bps?
A: Set a target monthly payment first, then use a lender who can text you intraday rates. In Q4, avoid locking right before CPI or a Fed presser if you can; lock the morning after the print when spreads calm a bit. Ask for a float-down option in case rates improve before closing (often +0.125% to +0.25% in price). Use a 45-60 day lock if your escrow is longer, and budget a backup: buying 0.5-1.0 points usually lowers rate ~0.125-0.25%. Quick math: on a $400k loan, a 50 bp swing is roughly $130-$150/month, so if that would bust your DTI, lock sooner rather than later. I’ve had deals blow up in 48 hours; don’t play rate roulette if your margin is thin.
Q: What’s the difference between paying points, a temporary buydown, and choosing a 5/6 ARM?
A: Points are permanent, pay upfront to lower the rate for the life of the loan. Breakeven is points cost divided by monthly savings; if you’ll keep the loan beyond that, it’s worth it. A 2-1 or 1-0 temporary buydown lowers payments in years 1-2, funded by seller or lender credit; great for cash-flow relief but the note rate is unchanged. A 5/6 ARM usually starts lower than a 30-year fixed, then adjusts every 6 months after the fixed period; good if you expect to sell or refi before the first reset, but read the caps (e.g., 2/1/5). If you want payment stability, points. If you need runway now, temp buydown. If you’re rate-risk tolerant and expect to move/refi, ARM. Alternatives in this market: combine a seller credit with a temp buydown and keep your cash for reserves, yea, that’s legit.
Q: Is it better to shop in Q4 or wait for possible rate cuts later this year?
A: Q4 typically has 20-30% fewer new listings than summer, and sellers can be 1-2% more negotiable. You’ll face fewer bidding wars but also fewer good fits. If you find a match now, use the seasonality: ask for seller credits to cover closing costs or a temp buydown, and push for a year-end close. If you wait for cuts later this year, payments might drop, but buyer traffic usually jumps and price softness can vanish. My rule: if a home meets 80-90% of your needs and is fairly priced, take Q4 use; if you need a very specific layout/school zone, waiting may increase your choices but expect tighter pricing.
Q: Should I worry about a 50 bp rate swing blowing up my debt-to-income?
A: Short answer: yes, kinda. A 50 bp move can cut purchase power by ~5%, which is enough to trip DTI fails. Build a 1-2% DTI cushion into your pre-approval, and verify your lender is using current rates, not last week’s sheet. Practical fixes if rates pop: trim price by 3-5%, ask for a seller credit to buy the rate back down, increase down payment by 2-5% if you can, or pay off a small auto/credit card to free DTI. If you’re tight on cash, consider a 5/6 ARM with conservative caps or a temporary buydown funded by seller credit. Worst-case fallback: extend your lock or switch property tiers (different taxes/HOA can rescue DTI). I’ve seen all of these save a deal at the 11th hour.
@article{will-3-inflation-and-rate-cuts-lift-housing-prices,
title = {Will 3% Inflation and Rate Cuts Lift Housing Prices?},
author = {Beeri Sparks},
year = {2025},
journal = {Bankpointe},
url = {https://bankpointe.com/articles/inflation-rate-cuts-housing/}
} 