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Higher Mortgage Rates Aren’t Good News. But They Could Create a Very Good Opportunity for Denver Buyers.
Why today’s uncomfortable mortgage market may give patient buyers something they haven’t had in years: leverage.
By Bruce McQuiston
Your Personal Real Estate Coach
Here’s a headline nobody buying a home wanted to see:
Interest rates are under pressure again.
Mortgage rates have recently pushed back toward 7%, and that’s going to cause some potential buyers to say:
“That’s it. I’m waiting.”
Bruce understands the reaction.
Nobody wants a higher mortgage payment.
But before automatically stepping away from the housing market, there’s another side of this story worth understanding.
What if the higher rate isn’t just increasing your cost?
What if it’s also reducing your competition?
That’s where today’s market gets interesting.
First, Don’t Confuse the Fed Rate With Your Mortgage Rate
This is important.
The Federal Reserve does not directly set 30-year mortgage rates.
Mortgage rates are influenced much more heavily by longer-term bond markets, including the 10-year Treasury, inflation expectations and investor demand for mortgage-backed securities.
That’s why a quarter-point Fed move does not automatically create a quarter-point change in your mortgage.
Mortgage markets often begin reacting before the Federal Reserve even announces a decision.
So Bruce wouldn’t recommend making a $600,000, $800,000 or $1 million housing decision based on one Fed headline.
Look at the entire market.
And that’s where the opportunity begins to appear.
High Rates Can Remove Buyers From the Competition
Think about what happens when mortgage rates jump.
Buyer A says:
“I’m waiting.”
Buyer B says:
“Maybe next spring.”
Buyer C lowers their price range.
Buyer D stops looking completely.
That’s obviously negative for sellers.
But what happens to Buyer E who remains financially qualified and still needs or wants to move?
There may suddenly be fewer people standing next to them at the negotiating table.
That’s leverage.
And it’s something buyers had very little of during the frenzy of a few years ago.
Back then, buyers frequently competed against multiple offers.
Inspection protections were sometimes reduced.
Homes sold almost immediately.
Sellers dictated many of the terms.
Today’s buyer may face a higher borrowing cost.
But in exchange, that buyer may have something extraordinarily valuable:
Choices.
Look at What’s Already Happening in Denver
The latest Denver Metro data helps explain the opportunity.
In August, there were more than 13,000 active homes on the market.
New listings increased from a year earlier.
Closed sales declined.
And the median home spent 29 days in the MLS.
That’s not a market where every seller automatically gets whatever they want.
It’s a market where the individual property matters.
Some homes are still selling quickly.
Others aren’t.
And Bruce believes those differences are where smart buyers should be looking.
Don’t Ask, “How Much Below Asking Can We Offer?”
This is where buyers frequently negotiate the wrong number.
They find a home listed at $750,000 and immediately ask:
“Think they’ll take $725,000?”
Maybe.
But Bruce would start somewhere else.
“Where is the leverage in this particular transaction?”
How long has the home been listed?
Has the price already been reduced?
Did a previous contract fall apart?
What else is competing against it?
Does the property need work?
Does the seller need a particular closing date?
Is the house vacant?
Has the seller already moved?
Would the seller consider paying closing costs?
Could the seller contribute toward an interest-rate buydown?
That’s a negotiation.
Simply picking a lower price is an offer.
There’s a difference.
The Best Deal May Not Be the Lowest Price
Suppose a seller is willing to give up $10,000 to make the transaction happen.
Most buyers immediately think:
Take $10,000 off the house.
But that may not always produce the best financial outcome.
Depending on the buyer’s financing and lender requirements, that same $10,000 might be used toward allowable closing costs or an interest-rate buydown.
That can potentially affect the buyer’s near-term cash requirements or monthly payment much more noticeably than spreading a $10,000 price reduction across a 30-year mortgage.
The correct strategy depends on the loan, lender guidelines, appraisal, buyer’s plans and the specific transaction.
But that’s exactly the point.
Don’t just negotiate price.
Negotiate the outcome.
Here’s the Counterintuitive Opportunity
Imagine two markets.
Market A
Mortgage rates fall substantially.
Buyers flood back into the market.
The best homes attract multiple offers.
Sellers become less willing to negotiate.
Prices face additional upward pressure.
Market B
Rates remain uncomfortable.
Some buyers stay sidelined.
Homes take longer to sell.
Certain sellers become increasingly motivated.
Concessions and negotiations become more common.
Which market gives a qualified buyer more negotiating power?
Potentially Market B.
That doesn’t mean someone should buy a home they can’t comfortably afford simply because a seller will negotiate.
It means buyers shouldn’t automatically assume:
Higher rate = worse time to buy.
There are more variables in the equation.
You Can Potentially Change the Loan Later
This is another consideration, although it needs to be treated carefully.
A buyer who purchases today may have the opportunity to refinance later if rates decline sufficiently and the economics make sense.
There is no guarantee that rates will decline.
And refinancing isn’t free.
So Bruce would never build a purchase decision around:
“Don’t worry, you’ll just refinance next year.”
That’s speculation.
Instead, the question should be:
Can you comfortably afford this home under today’s terms?
If the answer is yes, then a future refinancing opportunity would be a potential bonus rather than something required to make the purchase work.
That’s a much safer way to approach the decision.
Bruce’s Perspective
This is exactly why Bruce believes national headlines shouldn’t make real estate decisions for people.
“Mortgage Rates Hit 7%” tells you something important.
But it doesn’t tell you:
Whether a particular Littleton seller is motivated.
Whether a Highlands Ranch listing has already reduced its price twice.
Whether an Englewood property has been sitting for 50 days.
Whether a seller would contribute toward an allowable rate buydown.
Whether there are competing offers.
Or whether a house that’s slightly dated represents a better opportunity than the beautifully remodeled house everyone else wants.
The headline gives you information.
The transaction gives you leverage.
And those are two different things.
Sellers Need to Understand This Too
There’s another side to this market.
If higher borrowing costs reduce the buyer pool, sellers cannot simply ignore the affordability problem.
The property needs to earn the buyer’s attention.
That means:
Pricing correctly.
Preparing the home.
Understanding the competition.
Addressing obvious condition issues.
Marketing aggressively.
And remaining open to creative negotiations when they improve the seller’s overall outcome.
The goal isn’t automatically to give money away.
It’s to understand which $10,000 produces the best result.
Sometimes it’s price.
Sometimes it’s a concession.
Sometimes it’s repairs.
Sometimes it’s timing.
And sometimes the right answer is:
No concession at all.
Every transaction is different.
Buyers: Don’t Wait for the Headline You’ve Been Hoping For
This may be the biggest takeaway.
A lot of buyers are waiting for the headline that says:
“Mortgage Rates Finally Fall.”
But millions of other potential buyers may be waiting for exactly the same headline.
If affordability improves substantially, demand can improve too.
And when more buyers return, today’s negotiating opportunities may change.
So instead of trying to perfectly time interest rates, Bruce recommends asking a more useful question:
“Can today’s difficult market create an opportunity for me?”
Maybe the answer is no.
Maybe today’s payment simply doesn’t work.
Then waiting may be appropriate.
But maybe you’re financially comfortable buying now and the reduced competition gives you negotiating power you wouldn’t have in a hotter market.
That’s worth investigating.
The Bottom Line
Higher mortgage rates aren’t something to celebrate.
They reduce purchasing power and make affordability harder.
But markets create tradeoffs.
Higher rates can reduce competition.
Reduced competition can increase negotiating leverage.
Longer market times can create motivated sellers.
Motivated sellers can create opportunities involving price, concessions, repairs and terms.
That’s why Bruce doesn’t believe buyers should ask:
“Is this a good market or a bad market?”
Ask:
“Where is MY opportunity in this market?”
That’s a much better conversation.
Want Bruce to Find the Negotiating Opportunities?
Bruce is identifying properties in Littleton, Highlands Ranch and Englewood where days on market, price reductions, condition and seller circumstances may be creating negotiating opportunities.
If you’re considering buying but today’s mortgage rates have you sitting on the fence, don’t start by touring houses.
Start with the numbers.
Message Bruce: “FIND MY LEVERAGE.”
Bruce will help you look at where the opportunities actually are.
No hype.
No prediction about where rates are going.
Just today’s market, today’s numbers and today’s negotiating possibilities.
Bruce McQuiston
Your Personal Real Estate Coach
Data Before Opinion. Negotiate the Outcome.
