Interest Rates & Buying Power: What You Need to Know

by David J. Moore

When you’re thinking about buying or selling a home on Kent Island, in Stevensville, Chester, or anywhere along Maryland’s Eastern Shore, there’s one factor that can make or break your plans: interest rates.

They’re not the most exciting topic—until you realize just how much they affect your buying power (what you can actually afford) and your selling strategy (how attractive your home looks to buyers).

In this post, we’ll break it down in plain English—what interest rates mean for you, how they affect the market here on the Eastern Shore, and what smart steps you can take right now.

What Exactly Are Interest Rates?

At its core, an interest rate is simply the cost of borrowing money. When you get a mortgage, your lender charges you interest on the loan amount. That percentage determines your monthly payment.

Lower rates = lower monthly payment = higher buying power.
Higher rates = higher monthly payment = lower buying power.

It’s the difference between being able to afford a $500,000 waterfront home in Stevensville… or needing to shop closer to $425,000 in Chester.

Why Interest Rates Matter So Much in Kent Island & the Eastern Shore

Our local market is unique. Kent Island and Stevensville attract buyers who want quick access to Annapolis and D.C. while still enjoying the coastal, small-town lifestyle. Chester and other parts of the Eastern Shore draw buyers looking for value and space compared to the western shore.

But here’s the catch: buyers often shop based on monthly payment comfort zone, not just the sticker price of the home.

For example:

At 6% interest, a $500,000 home in Stevensville might have a monthly payment of around $3,000 (including taxes and insurance).
If rates bump to 7%, that same home could cost closer to $3,300/month.
For some buyers, that extra $300/month is the difference between making an offer… or passing on the property.

As a seller, that means your home might attract fewer qualified buyers when rates are higher. As a buyer, it means you may need to adjust expectations—or get creative with financing strategies.

How Rising or Falling Rates Impact Buyers

When Rates Go Up

Less buying power: You may qualify for a smaller loan amount.
More competition in lower price ranges: As buyers shift down, homes in Chester or Grasonville become even hotter.
Pressure to act quickly: Buyers often feel urgency to “lock in” before rates climb higher.

When Rates Go Down

Increased buying power: That dream waterfront home on Kent Island might suddenly fit the budget.
More competition in higher-end homes: Sellers of luxury properties in Stevensville or Queenstown often see more showings when rates ease.
Refinancing opportunities: Even if you bought last year, you could potentially lower your monthly payment.

What Sellers on the Eastern Shore Should Know

If you’re selling, interest rates aren’t just a “buyer problem.” They directly affect:

Your buyer pool: Higher rates shrink the number of people who can afford your price point.
Time on market: Homes can take longer to sell when rates rise.
Pricing strategy: A well-priced home in Chester may sell quickly even when rates are high, while overpriced homes on Kent Island can linger.

This is why accurate pricing and professional marketing are more important than ever. A home priced strategically—paired with staging, photography, and aggressive online marketing—can still sell fast, regardless of interest rate shifts.

Real-World Example: A Buyer’s Dilemma

Recently, one of our buyers in Stevensville was approved for up to $550,000. At the time, rates were around 6.25%. Just two weeks later, when rates ticked up to 6.75%, their approved budget dropped to $525,000.

That shift meant they had to rule out a few Kent Island homes they loved—but it also opened doors to some fantastic Chester properties that offered more space for less money.

It was a reminder: interest rates change the playing field fast.

How to Stay Ahead: Smart Strategies

Whether you’re buying or selling, you don’t have to just “wait and see.” Here are some proven steps:

For Buyers

Get pre-approved early: Know exactly what you can afford before you shop.
Ask about buydowns: Some sellers will contribute to lower your rate for the first 1–3 years.
Work with a local expert: Eastern Shore markets can vary street by street. A Kent Island home may price and appraise differently than one just across the bridge.

For Sellers

Highlight affordability: Market your home with clear info about monthly payments and potential buydowns.
Be flexible with incentives: Offering closing cost help or rate buydown credits can make your home stand out.
Lean on marketing: With buyers cautious, your home needs maximum exposure—online, social media, and professional networks.

The Bottom Line

Interest rates may feel like a numbers game, but the impact is very personal. It’s about whether you can afford the home where your kids will grow up… or whether your waterfront listing gets enough showings to generate strong offers.

On Kent Island, in Stevensville, Chester, and across the Eastern Shore, rates shape everything from buying power to market momentum. But the good news is—whether you’re buying or selling—there are strategies to help you win.

Let’s Talk About Your Next Move

If you’re curious how today’s rates affect your buying power or what your home could sell for in this market, let’s connect. Our VIP Buyer Program helps you secure the best deals, while our Seller Guide and free Home Value Offer give you the clarity you need to make smart decisions.

👉 Ready to buy or sell? Contact David J. Moore & Associates at 410-733-6477 or visit ChesapeakeShoresRealtor.com