Should I Wait for Rates to Drop Before Buying?

Waiting for mortgage rates to drop before buying a home in Greater San Antonio is one of the most common questions buyers ask—and one of the most misunderstood decisions in real estate. While it may seem logical to hold off for a better rate, the reality is more complex. Home prices, competition levels, inventory, and opportunity costs all factor into whether waiting actually saves you money. For buyers across Bexar County, Boerne, Schertz, Cibolo, and Helotes, the decision isn't just about rates—it's about the full picture of affordability and timing.

Direct Answer: For most buyers in Greater San Antonio, waiting for rates to drop is not the best strategy. While rates may decline modestly over time, home prices typically rise when rates fall due to increased buyer demand. The home you're considering today at current rates could cost significantly more at a lower rate, potentially offsetting any monthly payment savings.

Key Points at a Glance

• Mortgage rates are currently in the low-6% range, down about half a percent from a year ago
• When rates drop, buyer competition increases and home prices often rise
• The cost of renting while waiting can exceed potential rate savings
• Refinancing later allows you to capture lower rates without missing today's opportunities
• Today's rates remain below the historical average of approximately 7.8%
• Market timing is extremely difficult—even experts rarely predict rate movements accurately
• Personal readiness matters more than rate timing for long-term success

Why Waiting Often Costs More Than Buying Now

The instinct to wait for lower rates makes sense on the surface. A lower rate means a lower monthly payment on the same loan amount. However, this calculation ignores a critical variable: what happens to home prices when rates drop.

When mortgage rates decline, more buyers enter the market. Increased demand drives competition, which pushes home prices higher. The home listed at $350,000 today at a 6.2% rate could easily be $375,000 or more when rates hit 5.5%. Your monthly payment might end up the same—or higher—despite the better rate.

This isn't speculation. Home prices across the Greater San Antonio region have appreciated steadily over time, and national data shows prices have risen approximately 17.6% since early 2022 despite rates more than doubling during that period. Supply constraints, population growth, and sustained demand continue to support prices even as affordability pressures mount.

Quick Takeaway: Lower rates attract more buyers, which increases competition and often drives prices higher—potentially eliminating any savings from the rate reduction.

The Real Cost of Waiting

Beyond price appreciation, waiting to buy carries direct costs that many buyers overlook. The most significant is rent. Every month you wait, you're paying someone else's mortgage instead of building your own equity.

Consider a straightforward scenario. If you're paying $1,800 per month in rent and you wait 18 months for rates to drop, you've spent $32,400 on housing with no equity to show for it. Meanwhile, if home prices in your target area appreciate even modestly—say 3% annually—a $350,000 home becomes $365,750. You've paid $32,400 in rent and now need an additional $15,750 to purchase the same home.

This doesn't account for rising rents, either. Rental rates across San Antonio and surrounding communities have increased consistently, meaning your cost of waiting compounds over time.

For buyers exploring neighborhoods and weighing their options, the San Antonio Neighborhoods and Communities resource provides detailed information to help narrow your search while you evaluate timing.

Quick Takeaway: Rent payments while waiting, potential price appreciation, and rising rental costs often exceed any savings from a marginally lower interest rate.

What Current Rate Trends Actually Show

As of early December 2025, the average 30-year fixed mortgage rate sits around 6.2%, down approximately half a percentage point from the same time last year. The Federal Reserve has signaled potential continued easing, and industry forecasts suggest rates could drift toward the high-5% range by late 2026—but these projections carry significant uncertainty.

Several factors influence rate movements beyond Federal Reserve decisions. Inflation data, employment figures, Treasury yields, and global economic conditions all play roles. Even when the Fed cuts its benchmark rate, mortgage rates don't always follow in lockstep. In fact, mortgage rates have sometimes increased following Fed cuts due to other market dynamics.

The key insight for San Antonio buyers is that dramatic rate drops—back to the 3% range seen in 2020 and 2021—are extremely unlikely in the foreseeable future. Those were historically anomalous conditions driven by pandemic-era monetary policy. Planning your home purchase around a return to those rates means waiting indefinitely.

Quick Takeaway: Modest rate decreases are possible, but rates in the 5% to 6% range represent a reasonable expectation for the coming years—still below historical averages.

The Math Behind Rate Changes and Buying Power

Understanding exactly how rate changes affect your monthly payment helps put waiting into perspective. On a $350,000 loan amount with a 30-year fixed mortgage, here's how different rates translate:

At 6.5%, your principal and interest payment is approximately $2,212 per month. At 6.0%, that drops to roughly $2,098—a savings of $114 monthly. At 5.5%, the payment falls to about $1,987, saving $225 compared to the 6.5% scenario.

These differences matter, but they're often smaller than buyers expect. And remember: if home prices rise while you wait, you're borrowing a larger amount at the lower rate. A $375,000 loan at 5.5% results in a payment of approximately $2,129—higher than the $350,000 loan at 6.0%.

The Deciding to Buy a Home in San Antonio guide walks through the financial considerations buyers should evaluate when determining readiness.

Quick Takeaway: Rate savings are real but often modest—and can be completely offset by price increases on the home itself.

The Refinance Strategy: Buy Now, Refinance Later

One of the most practical approaches for today's market combines purchasing now with a plan to refinance when rates improve. This strategy allows you to stop renting, start building equity, and lock in today's prices while preserving the option to lower your rate later.

Refinancing isn't free—closing costs typically run 2% to 5% of the loan amount—but the math often works in your favor if rates drop meaningfully. Most financial experts suggest refinancing makes sense when you can reduce your rate by at least 0.5% to 0.75% and plan to stay in the home long enough to recoup closing costs through monthly savings.

The advantage of this approach is control. You're not trying to time the market perfectly. You're making a sound decision based on today's conditions while maintaining flexibility for tomorrow.

Quick Takeaway: Buying now and refinancing later lets you benefit from current prices and inventory while preserving the option to capture lower rates when they materialize.

Market Conditions Favor Buyers Who Act

Beyond rates, today's Greater San Antonio market offers conditions that may not persist if rates drop significantly. Inventory has improved compared to the extremely tight conditions of 2021 and 2022. Sellers across Bexar County, Comal County, and Guadalupe County are more willing to negotiate, offer concessions, and work with buyers on terms.

When rates fall, these favorable conditions typically evaporate. More buyers flood the market, multiple-offer situations become common again, and sellers regain leverage. The inspection contingencies, closing cost assistance, and negotiating room available today may disappear in a lower-rate environment.

Buyers who purchase now can often secure seller concessions worth thousands of dollars—sometimes including rate buydowns that effectively lower the interest rate for the first few years of the loan. These concessions function as built-in savings that wouldn't be available in a more competitive market.

Quick Takeaway: Today's balanced market conditions—more inventory, negotiable sellers, available concessions—may not last if rates drop and competition increases.

When Waiting Might Make Sense

While waiting rarely benefits most buyers, certain situations warrant a more cautious approach. If you're working to improve your credit score significantly—moving from the low 600s to the mid-700s, for example—a few months of focused effort could meaningfully lower your rate and improve your loan options.

Similarly, if you're saving for a larger down payment that would eliminate private mortgage insurance or substantially reduce your loan amount, that goal may justify a short delay. The key is having a specific, time-bound objective rather than an indefinite wait for market conditions to change.

If your employment situation is uncertain, you're considering a job change, or you expect a significant income shift in the near future, stabilizing those factors before purchasing makes sense regardless of rate conditions.

Quick Takeaway: Wait only if you have a specific, achievable financial goal with a defined timeline—not in hopes of timing the rate market.

"I love Tami! She originally helped my parents move in to our home 10 years ago, now it was my turn and without a doubt I knew I had to call Tami for some help. She is an amazing realtor that listens to what you want in a house, location, and provides helpful tips. She's incredible! The process was so smooth from beginning to end! I love my new home I just moved into. Thank you Tami!" — Sadie C.

Questions Buyers Often Ask About Waiting for Lower Rates

Q: How low could rates realistically go in the next year or two?

A: Most industry forecasts suggest rates could drift into the high-5% range by late 2026, but significant uncertainty exists. Rates in the 3% to 4% range seen during the pandemic were historically anomalous and are not expected to return under normal economic conditions.

Q: What if I buy now and rates drop significantly right after?

A: You can refinance. If rates drop enough to offset refinancing costs and you plan to stay in the home long-term, refinancing captures that benefit. Meanwhile, you've been building equity and avoided rent payments during the waiting period.

Q: Don't home prices drop when rates are high?

A: Not necessarily. Price declines require motivated sellers and reduced demand, but inventory constraints and population growth in Greater San Antonio continue to support prices. Modest softening in some areas has occurred, but significant price drops have not materialized despite higher rates.

Q: How do I know if I'm financially ready to buy regardless of rates?

A: Key indicators include stable employment, manageable debt levels, sufficient savings for down payment and reserves, and monthly housing costs (including taxes and insurance) that fit comfortably within your budget. A mortgage pre-approval provides clarity on your specific situation.

Q: Are adjustable-rate mortgages a good alternative in this environment?

A: ARMs can offer lower initial rates, but they carry risk if rates increase when the adjustment period begins. For buyers who plan to sell or refinance within five to seven years, an ARM might make sense. For long-term homeowners, the certainty of a fixed rate often outweighs the initial savings.

Common Misconceptions About Rate Timing

Many buyers believe they can successfully time the rate market, but even professional economists and mortgage industry experts frequently miss the mark on rate predictions. The factors influencing mortgage rates—inflation, Federal Reserve policy, Treasury markets, global economic conditions—interact in complex and often unpredictable ways.

Another misconception is that lower rates always mean better affordability. As discussed, home price increases accompanying rate drops can offset or exceed monthly payment savings. Affordability depends on the purchase price, your down payment, loan terms, property taxes, insurance, and HOA fees—not just the interest rate.

Some buyers also assume that current rates are historically high. In context, today's rates in the low-6% range remain below the long-term historical average of approximately 7.8% dating back to 1971. Buyers in the 1980s faced rates exceeding 18%. Today's rates, while higher than the pandemic-era lows, represent reasonable borrowing costs by historical standards.

Important Considerations for San Antonio Buyers

Greater San Antonio's market dynamics differ from national trends in important ways. The region's diverse economy—anchored by military installations, healthcare, technology, and manufacturing—provides stability that insulates against sharp downturns. Population growth continues to drive housing demand across Bexar County and surrounding communities.

For military families stationed at Joint Base San Antonio installations, timing decisions often involve PCS considerations that outweigh rate speculation. The Military Homebuying in San Antonio resource addresses the unique factors service members should weigh.

Local property taxes also factor into affordability calculations. Texas has no state income tax, but property tax rates are higher than many other states. Understanding how taxes affect your total monthly housing cost matters as much as the interest rate itself.

Finally, inventory and competition levels vary significantly by neighborhood and price point. Some areas of Greater San Antonio remain competitive with limited inventory, while others offer more selection and negotiating room. A localized understanding of conditions in your target areas informs timing decisions better than national rate headlines.

"I want to say thank you for the opportunity to learn and for being so patient, especially when I felt really lost. You always took the time to break things down and make sure I understood, and that means a lot to me. It's clear that you love what you do because you were so involved and made everything feel possible. I think you're outstanding at your job, and I just wanted you to know how much I appreciate you." — George M.

FAQ

Q: Is now a bad time to buy because rates are higher than a few years ago?

A: Not necessarily. While rates are higher than the historic lows of 2020-2021, they remain below long-term averages. More importantly, today's market offers improved inventory, more negotiating power, and available seller concessions that may not exist when rates eventually drop.

Q: How much could I save by waiting for a 1% rate drop?

A: On a $350,000 loan, a 1% rate reduction saves approximately $225 per month in principal and interest. However, if the home price increases by $25,000 while waiting, your loan amount rises and the monthly payment could end up similar or higher despite the lower rate.

Q: What's the best way to prepare if I decide to buy now?

A: Get pre-approved to understand your budget, research neighborhoods that fit your needs, work with an experienced agent who knows local conditions, and be prepared to act when the right property appears. Having your financing and documentation ready positions you to move confidently.

Q: Should I consider a rate buydown instead of waiting?

A: Rate buydowns—where you or the seller pay points upfront to reduce your rate—can be an effective strategy in today's market. Many sellers are offering buydown concessions as incentives. A 2-1 buydown, for example, reduces your rate by 2% the first year and 1% the second year before settling at the note rate.

Q: What if I'm not sure whether to buy or keep renting?

A: Evaluate your timeline, financial stability, and goals. If you plan to stay in the area for at least three to five years, have stable income, and can afford monthly payments comfortably, buying often makes sense regardless of rate conditions. Renting remains appropriate if your situation is uncertain or you need flexibility.

The Bottom Line

Waiting for rates to drop before buying a home in Greater San Antonio rarely produces the savings buyers expect. The combination of continued home price appreciation, rent payments during the waiting period, increased competition when rates fall, and the inherent difficulty of timing the market means most buyers benefit from acting when they're personally and financially ready rather than trying to predict rate movements.

Today's market offers advantages that may disappear in a lower-rate environment: improved inventory, negotiating leverage, seller concessions, and less frenzied competition. Buyers who purchase now retain the option to refinance later while building equity and locking in current prices.

The decision to buy a home should be based on your financial readiness, housing needs, and long-term plans—not speculation about where rates might go. If you're ready to buy, the conditions exist today to make that purchase successfully.

Ready to Explore Your Options?

Understanding how current market conditions and rates affect your specific situation starts with a conversation. Whether you're weighing the rent-versus-buy decision, wondering about your purchasing power, or simply want to understand what's happening in your target neighborhoods, getting clear information helps you move forward with confidence.

Tami Price brings nearly two decades of experience helping buyers across Greater San Antonio navigate every type of market. With over 600 five-star reviews and recommendations across multiple platforms, her focus remains on providing honest guidance tailored to each client's circumstances—not pushing transactions.

Contact Tami

Tami Price, REALTOR®, Broker Associate
📞 210 620 6681
✉️ tami@tamiprice.com
🌐 TamiPrice.com
📅 Book a Consultation

Disclaimer: This content is for educational purposes only and does not constitute financial or mortgage advice. Interest rates change frequently and the rates mentioned reflect conditions at the time of writing. Your personal rate will depend on your credit profile, down payment, loan type, and lender. Always consult with a licensed mortgage professional to understand your specific financing options and obtain current rate quotes.