If you’ve been watching the housing market from the sidelines, waiting for the “right time” to buy, early 2026 is offering a signal worth paying attention to: mortgage rates are lower than they were at this time last year.
While rates are still higher than the historic lows of 2020–2021, the comparison that matters most for today’s buyers is year-over-year affordability. And on that front, conditions have quietly improved.
Let’s break down what this means — and why it could translate into real buying power for well-prepared homebuyers.
Mortgage Rates: Lower Than Last Year, Even If They Feel High
In early 2025, many buyers faced peak affordability challenges as mortgage rates hovered at higher levels amid persistent inflation and economic uncertainty. Fast forward to today, and rates have moderated meaningfully from last year’s highs.
That shift matters because:
Even a 0.50%–0.75% rate improvement can significantly reduce monthly payments
Lower rates often improve debt-to-income (DTI) ratios, helping more buyers qualify
Buying power increases without needing a larger down payment
For buyers who were close to qualifying last year — or who stepped back due to payment shock — this change can be the difference between waiting and moving forward.
What Lower Rates Mean for Monthly Payments
A modest rate reduction doesn’t sound dramatic, but the math adds up quickly:
On a $350,000 loan, a lower rate can reduce payments by hundreds of dollars per month
Over the life of the loan, that difference can total tens of thousands of dollars
Buyers may be able to afford more home or feel more comfortable with long-term cash flow
This is especially important for:
- First-time homebuyers
- Buyers relocating for work or lifestyle reasons
- Families balancing housing costs with rising insurance, taxes, and everyday expenses
Buyers Are Gaining Leverage — Quietly
Another key factor supporting today’s buyer opportunity is market psychology.
Many buyers remain cautious, assuming rates are still “too high.” That hesitation has kept competition more balanced in many markets, even as affordability improves.
The result?
- Less frantic bidding compared to peak years
- More room for negotiation in certain price ranges
- Greater ability to structure offers strategically (seller concessions, rate buydowns, closing costs)
When rates fall but buyer demand hasn’t fully surged yet, prepared buyers are often in the strongest position.
Why Timing Matters More Than Perfect Rates
One of the most common mistakes buyers make is waiting for a “perfect” rate environment. In reality:
- Rates move daily and are influenced by factors outside any one buyer’s control
- Home prices and inventory also shift — sometimes faster than rates
- You can refinance a rate later, but you can’t rewind purchase price or missed equity growth
The buyers who tend to win long-term are those who focus on overall affordability and strategy, not headlines alone.
A Smarter Way to Approach Buying Right Now
Rather than asking “Are rates low enough?”, better questions are:
- How does today’s payment compare to last year?
- Does this purchase fit my long-term plan?
- Can I structure financing to keep flexibility if rates improve further?
Working with a mortgage advisor who understands both current market conditions and future options is critical in answering those questions correctly.
Ready to Explore Your Options?
If you paused your home search last year — or assumed buying wasn’t realistic — now is a smart time to take another look.
At Home South Mortgage, we help buyers evaluate:
- Real-world affordability based on today’s rates
- Loan programs that fit both short- and long-term goals
- Strategies to buy now while preserving refinance flexibility later
Don’t miss out on this chance to turn your homeownership dreams into a reality!
Contact Home South Mortgage (205-578-2900) today to review your options and see whether today’s market creates an opportunity for you to buy with confidence.
All loans subject to approval. Equal Housing Lender.