Sellers Waiting for Lower Mortgage Rates: When Holding Out Stops Paying

The question for sellers who held out

If you stayed in your home, or listed at an ambitious price, because you expected mortgage rates to fall, how long can you afford to keep waiting? And at what point does cutting the price beat holding out?

The short answer: waiting makes sense only when you can carry the home comfortably and the market is not shifting against you. In a recent video, housing commentator Michael Bordenaro Clips argues that the market has shifted. He cites a 30-year fixed rate of 7.56% for the best-qualified borrowers, rising foreclosures, and inventory back to pre-pandemic levels. If he is right, a seller's pricing power depends less on what the neighbor got two years ago and more on what a buyer can afford to pay each month today.

This article uses his figures as a starting point, flags where they need checking, and adds context a seller can use.

What the video claims about rates

Bordenaro says rates jumped over a couple of weeks before leveling off. He quotes a 30-year fixed at 7.56%, and stresses that this applies to borrowers with credit scores of 830 or higher, strong income and no debt. Everyone else, he says, would see rates well above 8%.

Two cautions. First, a rate quoted in a video is a snapshot from one lender's sheet on one day. The most widely used national benchmark is the Freddie Mac Primary Mortgage Market Survey (PMMS), updated weekly, and it will not match any single quote. Check it before pricing your home. Second, "best-qualified" rates differ from what the typical buyer pays, which depends on credit score, down payment, loan type and points.

Why rates matter so much to sellers is simple arithmetic. Using a general illustration (not a quote): on a $400,000 loan, a rate of 6.5% gives a principal-and-interest payment of about $2,530 a month. At 7.5% it is about $2,800. That roughly $270 difference can push a buyer past a lender's debt-to-income limit. Bordenaro makes the same point: a rate rise of a point or so can add hundreds of dollars a month and disqualify buyers outright.

When fewer buyers qualify, sellers face a smaller pool. That is how rates reach prices without any change in the house itself.

The other pressures: foreclosures, short sales and inventory

Bordenaro describes a "perfect storm" for sellers, borrowing the comparison to what buyers faced six years ago. His list:

He also says rates have more than doubled compared with the period when conditions favored sellers. He describes the largest US metros as buyer's markets now.

These numbers are the creator's, and he does not name a data provider for the foreclosure figures. Treat them as directional until you confirm them against a source such as ATTOM, Realtor.com or Redfin. The wider point is still useful. Appraisers value a home by looking at recent nearby sales. When foreclosures and short sales close at discounts, they can lower the comparables that your own sale is measured against. For a closer look at one state's distress, see our report on Florida foreclosure rates by city.

What the video does not tell you: how much sellers are cutting

The angle many readers want answered is how large the price cuts are and how long homes sit. The transcript does not give a number for either. Bordenaro says prices in many places are still above where they were five or six years ago, though some markets have fallen 10% to 15% and others 20% to 30%. He does not say how long sellers who held out have been waiting.

For those figures, go to primary data:

• Redfin publishes data on the share of listings with price drops and on days on market.
• Realtor.com reports active listings, delistings and median days on market by metro.
• Zillow and FRED (the St. Louis Fed's data service) offer price indexes and mortgage-rate history.

Sellers should look at their own ZIP code and price band, not national averages. A market can be soft at $900,000 and tight at $350,000. For one analyst's view on the direction of prices, see Are home prices falling? What Lance Lambert says happens next.

Why FHA borrowers are under strain

A large part of the video focuses on FHA loans, which are government-insured mortgages with low down payment requirements. Bordenaro says the average FHA buyer had a 691 credit score, a 45% debt-to-income ratio and a 2% down payment. He argues such borrowers have little cushion, and that an emergency can quickly lead to default.

One detail needs correcting. FHA's published minimum down payment is 3.5% for borrowers with qualifying credit scores, so a 2% figure may reflect an average that includes other loan features or assistance programs, or may be a mistake. Verify it against HUD materials before repeating it. The broader risk he describes is reasonable: when more than 40% of gross income goes to debt payments, a job loss or medical bill can quickly threaten the mortgage.

For sellers, this matters in two ways. Distressed sales in your area can influence comparable values, and buyers with thin financial margins are the ones most likely to be shut out by higher rates. Our explainer on why it is so hard to buy a house covers how rates, prices and payments interact.

The case for patience, and where it falls short

Bordenaro's advice to buyers is to stay patient, keep making offers that fit the budget, and walk away if they do not work. He adds that a buyer's market does not guarantee a bargain on the first try. He also argues that low rates may not come back, pointing to the Federal Reserve's mortgage-backed securities purchases after 2008 as an unusual period of suppressed borrowing costs. Older buyers recall rates of 8% or even higher, he says, but homes then cost about three times annual income, versus more than five times in many markets now.

Counterpoints worth weighing

• Rates are hard to predict. Saying low rates are gone "forever" is an opinion. Rates move with inflation, Federal Reserve policy and bond markets, and no one can reliably call the direction.
• A buyer's market is not uniform. Supply and demand differ sharply by metro, price tier and condition. Some areas remain tight.
• Waiting has costs for buyers too. Rent, rising prices in some markets, and insurance or tax changes all affect the math of delay.
• The video is commentary, not data. The claims above lack cited sources, and the creator's view leans bearish on housing.

What this means for you

If you are a seller

• Price to the payment, not the past. Ask what monthly cost a buyer faces at today's rate for your list price. If it sits above local norms, expect slow traffic.
• Read your own market. Look at how long similar homes took to sell and how many had price cuts. If your listing has outlasted most of its peers, the market is giving you information.
• Compare the cost of waiting. Add up mortgage, taxes, insurance, maintenance and any second housing cost. Weigh that against the realistic gain from a later sale.
• Consider delisting only with a plan. Pulling a home off the market can make sense if you will improve it or can comfortably hold. Without a plan, you may relist later with a stale history.
• Consider concessions. Rate buydowns or closing-cost help can lower a buyer's payment without cutting your headline price. Ask your agent to model both.

If you are a buyer

• Calculate what you can afford at today's rate, with room for emergencies, before touring.
• Check the property tax effect. Bordenaro warns that buyers often assume the seller's tax bill carries over. If you pay more than the previous owner did, reassessment can raise the bill, and he recounts a Reddit story in which the projected tax roughly doubled after appraisal. Rules vary by state and county, so ask the local assessor how reassessment works and look up the last sale price.
• If you buy at a lower price than the last sale and the assessment does not adjust, you may be able to appeal.
• Consider an adjustable-rate loan only after reading when an ARM beats a 30-year fixed closely.

If you are an owner who is not selling

A softer market does not change the value of a home you plan to keep for years. A locked-in lower rate remains an asset. The main risk is being forced to sell, so keep reserves and avoid stretching payments.

What to watch next

• The weekly Freddie Mac PMMS reading, and whether rates hold, ease or climb.
• Local days on market and price-cut share in Redfin and Realtor.com data.
• Foreclosure and delinquency reports, particularly for FHA loans.
• Whether inventory keeps rising or begins to shrink as sellers delist.

Bordenaro says he cannot know how long this downturn will last, and that is the honest position. Sellers who hold out can be right, but the decision should rest on their own carrying costs and local data, not on a forecast for rates. Consider talking with a licensed agent and a tax or financial professional about your specific situation.