Average rates for a 30-year mortgage are hovering around 7%, a recent high. And with the Federal Reserve announcing its latest interest rate decision on Sept. 16, prospective homebuyers may be wondering whether relief is coming. But while the Fed can influence mortgage rates, it doesn’t set them directly — and a major drop in borrowing costs appears unlikely in the near future.
The good news is that the national average isn’t necessarily the mortgage rate you’ll receive. Your rate depends on factors including your credit, down payment, loan type and lender, which means comparing offers from multiple mortgage lenders can be especially important when rates are high.
If you’re considering buying now, start by finding out what rates and monthly payments you could actually qualify for rather than waiting for the overall market to change. Here’s what to know about today’s mortgage market and the steps you can take to find a more affordable loan.
Why Are Mortgage Rates So High?
Mortgage rates are influenced by several broad economic factors. “They reflect a wide range of market factors including inflation trends, economic growth, jobs data and shifts in the bond market,” says Hayes.
Right now, ongoing inflation, a relatively stable labor market and high Treasury yields are helping keep mortgage rates elevated.
The Federal Reserve doesn’t set mortgage rates directly, but its decisions can influence the bond market and investor expectations that help determine them. The Fed’s latest rate decision could therefore affect where mortgage rates go next, although a change in the federal funds rate doesn’t necessarily translate into an equivalent change in mortgage rates.
How to Get an Affordable Mortgage When Rates Are High
Even when mortgage rates are high overall, the rate you’re offered can vary considerably depending on your finances, loan type and lender. Comparing lenders and taking steps to strengthen your application can help you find the most affordable mortgage available to you.
- Find the rate you qualify for: National averages don’t necessarily reflect the mortgage rate you’ll receive. “The rate you qualify for depends on factors like your credit profile, down payment, loan type, home type and overall financial picture,” says Ryan Hayes, the head of retail sales at Chase Home Lending. Compare multiple mortgage lenders to find the best rate you personally qualify for.
- Improve your financial circumstances: Taking steps to strengthen your credit score, reduce debt and build savings can help you qualify for a better rate.
- Understand what you can realistically afford: Getting a mortgage preapproval early in your house hunting process can give you a better idea of what you can realistically afford. Also factor in costs outside of your mortgage, like property taxes, insurance and closing costs.
- Consider loan programs: Many buyers qualify for loan programs, such as FHA, VA and USDA loans that offer more favorable terms, such as low or no down payment options and lower interest rates.
- Don’t assume you can refinance later: While refinancing your mortgage can be a good option for some homeowners, you shouldn’t necessarily assume that this will be an option in the future. There’s no guarantee that interest rates will go down. Instead, focus on purchasing a home that you can comfortably afford in the current market.
Will Mortgage Rates Go Down in 2026?
A dramatic decline in mortgage rates this year appears unlikely. “We could see periods of modest improvement if inflation continues to cool, but I don’t anticipate a dramatic drop in the near term,” says Dan Bauer, the head of residential lending at Alliant Credit Union.
And higher rates could persist beyond this year. “The forces keeping rates elevated are likely to persist for years rather than months,” says Mariano Torras, a professor of finance and economics at Adelphi University, citing long-term economic challenges that could keep borrowing costs elevated.
Should You Buy a Home Now or Wait?
Ultimately, whether you should buy a home now or wait depends on what you can comfortably afford. “Many buyers are adapting to today’s environment and focusing less on timing the market and more on finding a home purchase that fits their long-term financial goals,” Bauer says.
While waiting to buy a home could mean securing a lower mortgage rate down the line, there are downsides to sitting it out.
“As soon as rates do go down one day, we are going to see a huge wave of buyers enter the market, and that will cause home prices to rise sharply,” says Kevin Watson, a regional manager at Churchill Mortgage. Essentially, this means that any affordability gains from lower rates can be offset by higher home prices anyway.
Rather than trying to predict where mortgage rates will go, compare the rates and monthly payments available to you now. If you can comfortably afford the payment and the other costs of homeownership, today’s rates don’t necessarily have to keep you from buying.
Bottom Line
Mortgage rates may remain elevated for some time, but the national average doesn’t determine what you’ll pay. If you’re ready to buy, compare mortgage lenders and loan options, and focus on finding a monthly payment you can comfortably afford rather than trying to time the market.
FAQs
Is it worth buying a house when mortgage rates are high?
It depends. If you can comfortably afford your home and plan on living in the property long-term, it is often still worth it to purchase when mortgage rates are high.
What credit score do I need to get a lower mortgage rate?
According to Experian, a credit score of 760 or above will qualify for the best interest rate on a mortgage. Most conventional mortgages have a credit score minimum of 620.
Can I refinance my mortgage if rates go down later?
Yes, you can usually refinance your mortgage if interest rates decrease after you take out a mortgage. Still, there are costs associated with refinancing, such as loan origination and appraisal fees, so make sure refinancing is the best option for you.
How can I make a mortgage more affordable when rates are high?
You can make a mortgage more affordable when rates are high by making a larger down payment, improving your credit score, seeing if you qualify for government-backed loans like FHA and USDA loans, and comparing mortgage lenders.
Reporting by Faith Wakefield, USA TODAY / USA TODAY. USA TODAY Network via Reuters Connect.
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