When Mortgage Rates Fall Below 6%: What It Means for Western Wisconsin and Twin Cities Buyers and Sellers

If you’ve been keeping an eye on the housing market over the past year, you’ve probably heard one phrase again and again: “I’m waiting for rates to come down.”

For many buyers across Western Wisconsin and the Twin Cities, affordability remains the key barrier to making a move. And while mortgage rates have hovered around the mid-6% range for most of 2024, the good news is that we’re starting to see some relief — and even a few creative strategies to get rates below 6%, or even into the 4% range.

So what does this mean if you’re thinking about buying or selling a home locally? Let’s break it down.

Mortgage Rates Are Trending Down — Slowly but Surely

Recently, national mortgage rates dropped to 6.19%, the lowest level in over a year. Some experts with the National Association of Realtors® expect we could see that “sweet spot” of 6% or below by 2026, while others project rates will hover between 6% and 6.5% through 2028.

That might sound discouraging — but here’s the real story: some borrowers are already landing rates in the 5% and even 4% range right now.

How Are Buyers Getting Rates Below 6%?

One increasingly popular strategy is a mortgage buydown — a financing tool that temporarily or permanently reduces your interest rate.

Buydowns are often funded by seller credits, builder incentives, or lender contributions. For example, an $18,000 seller credit could be used to permanently reduce your mortgage rate by one or two percentage points — which can make a major difference in your monthly payment.

Across the country, listings offering mortgage buydowns have jumped from about 1% in 2022 to nearly 6% in late 2023, and they’re still going strong. In our local markets, especially in new construction communities around Hudson, River Falls, Woodbury, and Lake Elmo, builders are offering similar incentives to attract buyers.

Here’s what that might look like:

• FHA or VA buyers securing rates in the 4% range through permanent buydowns.

• Conventional buyers landing in the low 5% range with strong credit and strategic negotiation.

The key? Working with a savvy lender and a real estate agent who know how to structure these deals.

The Catch: What You Should Know About Buydowns

Buydowns can be a great way to boost affordability — but they’re not without their trade-offs.

If you’re funding the buydown yourself, you’ll need significant cash upfront. And if you opt for a temporary buydown (like a 2-1 buydown), your rate will increase after the first couple of years.

When the seller or builder is covering the buydown, be sure to look at the total picture. Sometimes, the list price is adjusted upward to account for that incentive. That’s where a skilled local Realtor makes all the difference — helping you determine whether the “deal” truly benefits you in the long run.

Other Ways to Lower Your Mortgage Rate

If your goal is to keep monthly payments manageable, there are a few other options worth exploring:

1. Assumable Mortgages – Some sellers still have ultra-low mortgage rates from 2020–2022. If their loan is assumable, you can take over their existing mortgage — along with that rate. We’re starting to see more of these opportunities across Western WI and the east metro suburbs.

2. Adjustable-Rate Mortgages (ARMs) – ARMs can offer a lower starting rate for the first 5–10 years. They’re a smart fit for buyers who don’t plan to stay in one home long-term, but they do come with future rate adjustment risks.

3. 15-Year Mortgages – These loans typically come with lower interest rates, though higher monthly payments. They’re ideal for buyers with strong income and a goal to pay off their home quickly.

What This Means for Local Buyers and Sellers

For buyers, this shifting rate environment means one thing: you don’t have to wait to find affordability.
Between buydowns, assumable mortgages, and negotiation strategies, there are ways to make today’s rates work in your favor.

For sellers, understanding these tools can help you attract more buyers. Offering a seller credit toward a buydown or closing costs can make your listing stand out in a competitive market — especially as more buyers look for creative financing solutions.

In areas like Hudson, River Falls, Stillwater, and the Twin Cities’ eastern suburbs, we’re already seeing motivated sellers and builders use these strategies to move inventory and create win-win deals.

The Bottom Line

Waiting for mortgage rates to fall below 6% might sound smart — but in reality, it could mean missing opportunities that already exist today.

With the right combination of local market expertise, strategic financing, and strong negotiation, buyers in Western Wisconsin and the Twin Cities can still find affordable paths to homeownership — even in a higher-rate environment.

Whether you’re thinking about buying your first home, upgrading, or selling, now’s the time to talk strategy. Let’s explore how to make today’s market work for you.

Interested in learning more about your local options?
📞Johnson Home Group  651-333-7656
📧 info@johnsonhomegroup.com | 🌐 https://www.johnsonhomegroup.com

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