By Tom Bradley

In this space, we talk often about how sensitive the housing market is to interest rates. In Tara Perkins’ article on real estate in the Report on Business the other week, there was a story about a young woman who was buying her first home. It was very revealing.

The article said the woman was relieved she’d managed to buy a home in August because it allowed her to lock in a pre-approved mortgage rate. If she hadn’t made the cutoff, the rate would have gone from 2.9% to about 3.3%.

“My mortgage rate was expiring, I had it for 120 days, and because I’m single and trying to do it on my own I couldn’t get a penny more than what I had. I had to be in by the 5th of September or the mortgage rate went up and it would have taken me out of the market for what I wanted.”

As is so often the case these days, home purchases are driven by a mortgage calculator. The financing rate, which is transitory, heavily influences the price paid, which is permanent. Unfortunately, it should be the other way around. If you have a choice between cheap financing and a cheap price, take the latter.