Interest rates play a major role in the real estate market, impacting everything from monthly mortgage payments to overall buyer activity. When interest rates are low, borrowing money becomes cheaper, which means lower monthly payments and more purchasing power for buyers. This often leads to a more competitive market, with homes selling faster and, in many cases, at higher prices. For sellers, low rates can be a huge advantage—more buyers mean more offers and stronger selling prices.
On the flip side, high interest rates can slow the market down, but they’re not all bad. While buyers may qualify for smaller loans and face higher monthly payments, high rates can cool competition and reduce bidding wars. For investors and cash buyers, this often opens up opportunities to negotiate better deals. Plus, in slower markets, sellers may need to offer incentives or lower prices, which can benefit strategic buyers willing to weather the higher cost of financing.