Every one percentage point move in mortgage rates changes your monthly payment by roughly 10%, which on a $600,000 loan is about $400 a month, and changes what you can borrow at the same payment by roughly $55,000 to $70,000. Home prices do not move proportionally in the other direction. In Greater Boston, the declines that did show up when rates spiked were limited, uneven, and mostly temporary.
That gap between the two is the whole story. Buyers keep waiting for rates to fall because they assume prices will hold still while their payment drops. Sellers keep assuming rate news will decide whether their house sells. Both are working from a version of the relationship that has not matched what the market actually did over the last four years.
Who this applies to
This is the buyer who has been pre-approved for a while and is watching rate headlines to decide when to start touring. It is the buyer who got priced out at 7% and is not sure whether a drop to 6% actually fixes anything. It is the seller weighing a fall listing against waiting for a friendlier rate environment. It is the homeowner sitting on a 3% mortgage doing the math on whether moving is even possible.
If you own a home you have no plans to sell and no reason to refinance, most of this does not affect you. For everyone else, the mechanics below are worth understanding before you make a timing decision based on a headline.
What one percentage point actually does to your payment
Here is the math on a $600,000 loan, 30-year fixed, principal and interest only.
| 30-year fixed rate | Monthly principal and interest on a $600,000 loan | What you could borrow at a $3,800 monthly payment |
|---|---|---|
| 5.5% | about $3,407 | about $669,000 |
| 6.5% | about $3,793 | about $600,000 |
| 7.5% | about $4,195 | about $543,000 |
The middle row is close to where the 30-year fixed has been running recently, in the mid-6% range, so the rows above and below it are a fair picture of your realistic range rather than a hypothetical.
Read it in both directions. Holding the loan amount still, a point costs or saves you roughly $400 a month. Holding the payment still, a point up takes about $57,000 off what you can borrow, and a point down adds about $69,000. The relationship is not perfectly linear, so the exact swing shifts with your loan size and with where rates are sitting, but the 10% rule of thumb holds across the range most Greater Boston buyers are borrowing in.
Two things to keep in mind about that table. First, it is principal and interest only. Your actual monthly cost includes property taxes, homeowners insurance, mortgage insurance if you are putting less than 20% down, and a condo fee if you are buying a condo. In Greater Boston those add up to real money, and in the coastal South Shore towns insurance can be a bigger line than buyers expect. Second, the rate you are personally quoted is not the rate in the headline. Published averages, including Freddie Mac's weekly Primary Mortgage Market Survey, describe a benchmark borrower. Your quote depends on your credit score, your down payment, the loan type, whether it is a single family or a multi family, and whether you are going to live in it.
Why prices do not simply fall when rates rise
This is the part that surprises people. If rates rising cut buying power by 10%, prices should fall roughly to compensate. In Greater Boston, they did not fall anywhere near that much.
The reason is supply. When rates rose, the buyers who left the market were matched by sellers who also left it. A large share of existing homeowners hold mortgages at rates well below the current market, and giving up a 3% loan to take on a 6% loan on a more expensive house is a trade many of them simply will not make. That keeps homes off the market, which keeps inventory tight, which holds prices up even as demand thins out.
So higher rates in this region have mostly shown up as fewer transactions rather than lower prices. Fewer buyers, fewer sellers, longer decisions, less bidding at the margins. There was real softening when rates first spiked, and it never fully went away in specific segments, especially higher price points and homes that need work. But it was limited, it was uneven from town to town, and across most of the region it reversed. The broad collapse buyers were told to wait for did not arrive.
Where 2026 differs is at the margin. Inventory has loosened modestly this year and buyers have more room than they had in 2021 or 2022, but supply is still historically tight and prices across the region have generally held firm or kept rising. Better than the worst of it is not the same as a buyer's market.
What actually happens when rates fall
The version most buyers imagine is that their payment drops and everything else stays the same. That is not usually how it plays out.
When rates fall meaningfully, the buyers who stepped back step forward, and they do it all at once because they are all watching the same headlines. Competition returns first, before inventory does. The result is more offers per house, faster decisions, and less negotiating room, which is exactly the environment where you pay more than list and waive things you would rather not waive.
There is a real argument that in a supply-constrained market like this one, a lower rate on a higher price with more competition is not obviously a better deal than a higher rate on a price you negotiated. You can refinance a rate. You cannot renegotiate a purchase price after closing.
That is not a case for buying at any rate. It is a case for deciding based on your own numbers and your own timeline instead of a forecast, because the rate that shows up in the headline is the one every other buyer sees too.
How to pressure-test your budget against a rate move
If you are buying in the next year, run this before you tour anything else.
1. Ask your lender for the full monthly payment at today's rate, not the rate. Principal, interest, taxes, insurance, mortgage insurance, and the condo fee if there is one.
2. Ask for that same payment at one point higher and one point lower. Now you know your range instead of a single number that expires.
3. Set your ceiling on the monthly payment, not the purchase price. If rates move while you are shopping, the payment is the thing that has to stay livable.
4. Ask what your rate lock actually covers. How many days, what it costs to extend, and whether there is a float-down option if rates improve before you close.
5. Ask what is available to lower the payment without lowering the price. Permanent points, a temporary buydown, or a lender credit each change the math differently.
Rate locks, buydowns, and what is actually negotiable
Once you are under agreement, the rate stops being a market question and starts being a negotiation.
A rate lock holds your quoted rate for a set window, commonly 30 to 60 days, which needs to cover your actual closing date with room to spare. Extensions generally cost money. Some lenders offer a float-down that lets you capture a lower rate if the market improves during your lock, usually for a fee.
Discount points lower your rate permanently in exchange for cash upfront. Whether they are worth it comes down to how long you will hold the loan. Divide the cost of the points by the monthly savings and you have your break-even in months. If you expect to sell or refinance before then, points are a bad trade.
A temporary buydown is different. The most common structure reduces your rate for the first year or two, funded upfront into an escrow account that subsidizes the difference, then the payment steps up to the full note rate. It can bridge a gap in the early years, and your lender will qualify you on the full note rate rather than the discounted one anyway, so budget on the full rate and know exactly what your payment becomes when the subsidy ends.
Any of these can be paid for by the seller, subject to your loan program's caps, in the form of a closing cost credit. That is often more valuable to a buyer than the equivalent price reduction. On a conventional loan the cap on interested-party contributions is tied to your loan-to-value, which for a primary residence or second home works out to 3% when you are putting less than 10% down, 6% between 10% and 25% down, and 9% at 25% or more down. Investment property is capped at 2% regardless of down payment. FHA allows up to 6%. The percentage is calculated on the lower of sale price or appraised value, and a credit cannot exceed your actual closing costs and prepaid expenses, so ask your lender for your specific number before you make the ask. A credit larger than the cap does not help you.
One Massachusetts note. Program loans like MassHousing and ONE Mortgage are priced separately from the conventional market, so when the headline rate moves, a program rate does not necessarily move with it the same day. If you are using one, ask the lender for that program's current rate rather than assuming the average applies to you.
What this means if you are selling
Your buyer pool is a payment pool, not a price pool. When rates rise, the people who could afford your house last month are still shopping, they are just shopping about 10% lower. That shows up as fewer showings, more time on market, and offers from buyers who need help with costs rather than buyers who will waive everything.
The practical moves are the ones that meet a payment-constrained buyer where they are. Price to the current market rather than to last year's comparable sale, because an overpriced listing in a rate-sensitive market sits and then sells for less than it would have at the right number. Consider offering a closing cost credit the buyer can apply to a buydown, which often gets you a stronger net than a straight price cut of the same size. And do the work that removes friction, because buyers stretching on payment have very little cash left for surprises after closing.
If you are selling and buying in the same move, run both sides of the rate change together. A lower rate helps you on the purchase and hurts you on the sale by bringing more competing sellers out. That is a wash more often than people expect.
Should you wait for a better rate
The honest answer is that nobody knows where rates are going, including the people who publish forecasts about it, and Greater Boston's supply problem is not something a rate change fixes.
What you can know is your own math. If the payment works today at a price you negotiated, waiting for a lower rate means betting that the payment savings will exceed the price appreciation and the added competition you will face. In a market where supply is still this tight, that is a real bet, and not an obviously good one.
If the payment does not work today, then it does not work today, and stretching into it because rates might improve later is how people end up house poor. Rebuild the number, adjust the price range or the town, and revisit it. Waiting because the math does not work is a completely different decision from waiting because you are trying to time a market.
The bottom line
A percentage point moves your payment about 10% and your borrowing power about $55,000 to $70,000 on a typical Greater Boston loan. It does not move prices anything like that much, because the same rate environment that removes buyers also keeps sellers in place and inventory tight.
Decide on the payment you can live with, get quoted at a point above and a point below, and negotiate the things you actually control: the price, the credits, and the terms. The rate is the one variable in this transaction you can change later.
FAQ
Common questions, answered.
Do home prices go down when mortgage rates go up?
Not proportionally, and in Greater Boston not by much. Higher rates reduce what buyers can pay, but they also keep existing owners with low-rate mortgages from selling, which keeps inventory tight. The effect here has mostly been fewer sales rather than lower prices. There was genuine softening when rates first spiked, concentrated in higher price points and homes needing work, but it was limited, uneven by town, and largely reversed.
How much does a 1% change in mortgage rates cost me?
On a $600,000 loan, roughly $400 a month in principal and interest, or about 10% of the payment. Looked at the other way, a point higher takes roughly $57,000 off what you can borrow at the same payment, and a point lower adds roughly $69,000. Both figures scale with your loan size.
Is it better to buy now at a higher rate or wait for rates to drop?
It depends on your numbers, not on the forecast. A lower rate brings sidelined buyers back all at once, so competition returns before inventory does, which usually means higher prices and less negotiating room. You can refinance a rate later, but you cannot renegotiate the price you paid. If the payment works today at a price you negotiated, waiting is a bet, not a strategy.
Can the seller pay to lower my mortgage rate?
Yes, through a closing cost credit you apply to discount points or a temporary buydown, and that is often worth more to you than an equivalent price reduction. Interested-party contributions are capped by loan program. On a conventional loan for a primary residence or second home the cap is tied to your loan-to-value, working out to 3% with less than 10% down, 6% between 10% and 25% down, and 9% at 25% or more down. Investment property is capped at 2%, and FHA allows up to 6%. Confirm your specific cap with your lender before you make the ask, and remember the credit cannot exceed your actual closing costs.
