Mortgage rates crossed 5% this week for the first time since 2018. In January they were 3.2%. That is a massive shift in four months. If you were pre-approved for $420K in January, you now qualify for roughly $365K. That is $55,000 in lost purchasing power. Here is what this means for the Tampa Bay market and what buyers should do.
How Does a 5% Rate Change the Math?
On a $400,000 loan at 3.2%, your principal and interest payment was $1,729/month. At 5%, that same loan costs $2,147/month — an increase of $418/month or $5,016/year. To keep the same $1,729 payment at 5%, you would need to reduce your loan amount to $322,000. That is the real impact: buyers who could afford Valrico at 3.2% may now be looking at Plant City or Ruskin.
Will This Cool the Bidding Wars?
It is already starting to. Showing traffic dropped 15-20% in April compared to March. Multiple offers are still happening on well-priced homes, but instead of 12-15 offers, we are seeing 4-6. Homes that are even slightly overpriced are sitting for a week instead of selling in 48 hours. The frenzy is not over, but the fever is breaking.
Is This a Good Time to Buy or Should You Wait?
Here is the paradox: higher rates reduce your purchasing power, but they also reduce your competition. A buyer who acts now faces fewer bidding wars, more negotiating room, and sellers who are starting to accept contingencies again. If rates drop later, you refinance. If rates keep climbing, you locked in at 5% instead of 6% or 7%. The worst position is sitting on the sidelines watching both rates and prices move against you.
Have questions? Barrett Henry, REALTOR® and Broker Associate at REMAX Collective, brings 23+ years of real estate experience. Call (813) 750-0926 or email barrett@nowtb.com.