M
ortgage rates have dropped significantly over the past few months, with 30-year rates now hovering around 6.5%, down from an average of 7.4% in November 2023. Historically, lower interest rates make housing more affordable, but financial advisor Suze Orman cautions that it may not be time to buy just yet. In her podcast, she explained why a lower interest rate doesn't necessarily mean lower property prices.

    Homeowners who negotiated their mortgage years ago with low interest rates aren't likely to sell now that rates are higher. Even if interest rates drop further, as Orman predicts they might, it won't be an incentive for those with lower rates to get out of their mortgage. The current housing shortage of 4-7 million homes across America means there's still not enough supply to meet demand, and prices will remain high.

    Lower rates may also increase competition to buy a house, driving up real estate prices even more. Interest rates can make real estate more affordable, but Orman notes that the effects will take time to be felt in the market. Buyers, sellers, and investors may delay their moves until conditions change, further delaying the impact of lowered rates.

    For those ready to buy now, Orman advises getting a fixed-rate mortgage with a 15- or 30-year term when rates are very low. This locks you into that rate for the duration of your mortgage, regardless of market fluctuations.