“Date the Rate and Marry the House” –
Is This Still a Good Idea?
You’ve heard the old expression, “Date the Rate but Marry the House.” The idea is that you can
always refinance the loan, but the right house may not come around again. But with rising interest
rates and falling home inventory, many buyers are wondering if this mantra still rings true. Should
you marry the house at whatever interest rate is available?
First, the US lending market has been experiencing record low interest rates. In May of 2000 saw
the 30-year fixed rate rise to an average of 8.6% before falling to 6.5% in July of 2008.
Historically, any long-term interest rate under 6.5% was considered exceptional. The pattern of
rising and falling interest rates has been repeated multiple times in the past 40 years and likely
will continue.
While purchasing an unaffordable home with the hope of refinancing quickly into a lower rate is a
poor strategy, so is waiting on the home that you like or need if you can manage the payment. A
simple truth of the housing market is that as rates increase, home values usually decrease as more
buyers are forced from the market. This offers the opportunity for buyers to find a home previously
unaffordable. When rates do decline, they can refinance for even more savings.
The concept of “Date the Rate and Marry the House” is not new. Home buyers in this real estate
climate need to be more intentional about the home they choose and the costs incurred. Rates will
most likely increase before they fall, so weighing the lower home price to the higher interest rate
is a personal decision to be taken carefully.
