The Interest Rate Question Every Madison Home Buyer Is Asking

The most common question I'm hearing from buyers right now: "Should I wait for interest rates to come down?" My 25 years trading currencies on Wall Street taught me to watch fixed income markets closely, and I need to address a critical misconception about how mortgage rates actually work.

The Federal Reserve Doesn't Control Mortgage Rates

Here's what most people don't understand: Federal Reserve rate cuts don't automatically mean lower mortgage rates.

Mortgage rates track the 10-year Treasury bond, which is controlled by global institutional investors, sovereign wealth funds, and individual bond buyers - not the Fed. Even as the Fed cuts its discount rate, if inflation persists or economic data runs hot, Treasury yields and mortgage rates can actually increase.

The 30-year mortgage rate currently sits between 6% and 6.25%, probably the lowest we've seen in two years. There's talk of the Fed doing another 50 basis point cut at the next meeting. But that doesn't guarantee mortgage rates will follow.

The Risk of Waiting

I tell buyers: if you find the right house at a price you can afford, buy it. You can always refinance if rates fall substantially. But consider the alternative scenario - what if rates go up instead?

If inflation numbers continue coming in elevated, if the economy doesn't slip into recession, if proposed tariffs create pricing pressures, any of these factors could push the 10-year Treasury yield higher. That means mortgage rates could creep back up to 6.5%, 7%, or higher.
Then you're kicking yourself for not locking in at 6.25%. And you've lost out on the house you loved.

The Refinancing Safety Net

Think of it this way: buying now with the option to refinance later gives you flexibility. You secure the house you want, you lock in today's price, and if rates drop significantly, you refinance and lower your payment.

But if you wait and rates rise? You've limited your options. Either you pay more in interest on the same house, or that house is now out of your budget entirely.

A Real-World Success Story

Last year, a Wall Street colleague was thinking about selling his Madison home. He hoped to get $1.6 million. I thought it was achievable, but he decided to wait.

In spring 2023, I called him. "Brendan, this isn't a sales push. If you're staying 10 years, stay. But as a trader, I'm telling you - this is a fantastic time to sell."
He listed. My wife Amy worked with his wife on staging. He ended up getting $1.85 million - $250,000 more than he expected.

The point? Timing matters, but not always in the way people think. He could have waited for "perfect" conditions that never materialized. Instead, he recognized the opportunity in front of him.

The Trader's Perspective

After decades watching markets, here's what I know: nobody can predict interest rate movements with certainty. The bond market is influenced by countless global factors: economic data from multiple countries, geopolitical events, institutional positioning, inflation expectations.

Waiting for the "perfect" rate is like waiting for the "perfect" stock price. By the time everyone agrees it's perfect, the opportunity has often passed.

What About Higher-End Properties?

I'm seeing an interesting bifurcation in our market. Entry and mid-level homes still see intense competition and move quickly. Properties over $2 million are taking slightly longer to sell than they did two years ago, but they're still moving, and absorption rates remain around one month even at the $2-3 million price point.

This tells me that buyers with the means to purchase at higher price points are less deterred by current rates. They understand that the house itself matters more than trying to time the rate market perfectly.

My Advice for Fall Buyers

If you're ready to buy - financially and personally - don't let rate speculation paralyze you. Fall and winter typically offer less competition than spring's multiple-offer frenzy. You'll have more time to evaluate properties, less pressure to waive contingencies, and sellers who are motivated to close before the holidays.

Yes, rates could drop. They could also rise. But the right house in the right location at the right time? That's worth more than gambling on rate movements you can't control.

The key word in this business is trust - trust in the process, trust in your financial readiness, and trust that the fundamentals of location, community, and fit matter more than trying to perfectly time the market.

Scott Spelker is a real estate professional at The Spelker Team Coldwell Banker Realty in Madison. Prior to real estate, he spent 25 years on Wall Street trading foreign exchange.