Mortgage rates are back above 7%, and if you’re thinking about buying a home, that number probably isn’t what you wanted to hear.But there’s another side to this market that buyers should be paying attention to.Higher rates can push buyers to the sidelines. And when there are fewer buyers competing for the same homes, the buyers who remain can have something that was much harder to find in the ultra-competitive Bay Area market: leverage.

What’s happening with rates?

The Federal Reserve raised its benchmark interest rate by 0.25 percentage point in September, its first increase since 2023. Meanwhile, the average 30-year fixed mortgage rate reached 7.03% as of September 24, according to Freddie Mac.It’s important to remember that the Federal Reserve does not directly set mortgage rates. Mortgage rates are influenced by a number of factors, including the bond market, inflation expectations and the broader economy.For buyers, however, the immediate impact is straightforward: borrowing has become more expensive.So why would this potentially create an opportunity?

Higher rates can mean less competition

When rates rise, some buyers pause their home searches. Others reduce their budgets or decide to wait and see what happens.That can change the negotiating environment for everyone who stays in the market.Instead of competing against multiple aggressive offers, buyers may have more room to negotiate things like:• Purchase price• Seller credits toward closing costs• Interest rate buydowns• Repairs• Contingencies• Closing timelines and other termsI’ve seen firsthand how much the negotiating environment can change when buyer demand cools.A seller who may have rejected credits or contingencies in a multiple-offer situation can become much more willing to negotiate when their home has been sitting on the market.

The interest rate is only one part of the deal

Buyers understandably focus on their mortgage rate because it directly affects the monthly payment.But the rate shouldn't be evaluated in isolation.Imagine getting a slightly better interest rate several months from now but competing against multiple buyers, paying more for the property and losing the ability to negotiate seller concessions.Compare that with purchasing in a slower market where you may be able to negotiate the price, receive seller credits or have the seller help fund a temporary or permanent rate buydown.The better opportunity isn't automatically the one with the lowest advertised interest rate. It's the deal that makes the most financial sense as a whole.

Don't buy today assuming you'll refinance tomorrow

You've probably heard some version of “marry the house, date the rate.”I don't think buyers should base one of the largest purchases of their lives on the assumption that rates will fall.Nobody knows exactly where mortgage rates will be six months or two years from now.If you purchase a home today, the payment needs to make sense for your household at today's rate.If rates eventually decline and refinancing makes financial sense, great. But that should be a future opportunity rather than the reason you stretch your budget today.

The Bay Area isn't one market

This is especially important in the Bay Area.San Francisco, San Jose, Oakland, Walnut Creek, and Fairfield can behave very differently from one another. Even neighboring communities can have completely different inventory levels, days on market and competition.Some properties will still receive multiple offers.Others may sit long enough for a buyer to negotiate aggressively.That's why I don't believe in blanket advice like “it's a buyer's market” or “it's a seller's market.”The better question is: What leverage do you have on this particular property?

There may also be financing strategies buyers haven't considered

The traditional 30-year fixed mortgage isn't the only tool available.Depending on the buyer and property, I work with lenders to explore options such as seller-funded rate buydowns, VA financing, assumable VA loans, bridge financing and alternative qualification programs for self-employed buyers.For homeowners who need to sell before purchasing, there are also programs designed to help qualified buyers purchase their next home before their current property sells.The financing strategy and the real estate negotiation should work together.

So, should you buy while rates are above 7%?

Higher rates alone aren't a reason to buy a home.But they aren't automatically a reason to stop looking either.If homeownership already fits your financial situation and long-term plans, a period of higher rates and reduced competition can create negotiating opportunities that disappear when borrowing costs improve and more buyers return to the market.Before deciding to wait, I recommend looking at actual homes, actual payments and actual negotiating opportunities.You may find that today's market gives you more leverage than the headline interest rate suggests.Thinking about buying in the Bay Area? I can help you look at the numbers, identify properties where there may be negotiating room and build an offer strategy around your specific situation.Evangeline Nguyen, REALTOR® eXp RealtyCA DRE #02210833Serving San Francisco, San Jose, East Bay, Fairfield & Monterey

Mortgage Rates Are Above 7%. Here’s Why That Could Give Bay Area Buyers More Leverage