With mortgage rates still hovering around 6.8%, many would-be homebuyers are questioning whether it is smart to buy now or hold out in hopes of lower rates later this year. Even though rates have not fallen yet, the housing market is picking up momentum again, and experts say buyers are adjusting their expectations and moving ahead with purchases based on current realities.
Buyers Are Adjusting to the New Normal
According to a recent TransUnion study, the increase in mortgage activity is not due to a drop in rates. Charlie Wise, senior vice president and head of global research at TransUnion, explained that buyers have simply accepted that waiting for sub-6% rates may not be realistic anytime soon.
"Consumers have readjusted their outlook, realizing they are not going to see immediate near-term rate relief," Wise said. Instead of waiting indefinitely, many are choosing to buy now based on personal needs rather than ideal interest rate scenarios.
The Hope of Refinancing Later
Even with today's higher rates, some buyers are entering the market with the plan to refinance if rates drop in the future. Many homeowners who took out mortgages with rates over 7% since 2022 are closely watching for opportunities to lower their payments.
"I can promise you almost every one of those people would love the chance to refinance down to 6%," Wise said, noting that even a modest rate reduction could save hundreds of dollars a month, money that could be redirected to savings, debt repayment, or other financial goals.
This potential to refinance later is helping some buyers feel more comfortable making purchases now, as long as they are financially prepared to manage their payments in the meantime.
Home Prices May Rise If Rates Drop
Melanie Musson, a finance expert at Clearsurance.com, pointed out another important factor: if rates eventually fall, demand for homes will likely surge, potentially driving up prices.
"If you can refinance to a lower interest rate later, you will have been able to buy a house before values increased, while also locking in a good rate eventually," Musson said.
In other words, buying now could mean less competition and lower prices compared to waiting until rates drop and the market heats up even more.
Your Credit Score Matters More Than Ever
While many buyers are laser-focused on interest rates, Wise emphasized the importance of maintaining a strong credit score. The better your credit, the better the mortgage terms you can secure — even when rates are high.
"More than any other type of credit product, the interest you pay really determines what your monthly payment is going to be," Wise said.
Simple steps like paying down credit card debt, consolidating high-interest balances, and correcting any credit report errors could boost your score by 20 to 50 points. That increase could mean a noticeably better interest rate and significant monthly savings on your mortgage.
Student Loan Payments Could Impact Your Mortgage Approval
Wise also issued a warning for buyers with student loans. After a long period of forbearance, missed student loan payments are once again being reported to credit bureaus — and falling behind could seriously hurt your mortgage chances.
"Starting in October, the clock started ticking again, and student loans are now being reported as on-time or late," Wise explained. Three or more missed payments will appear on your credit report and could cause a significant drop in your score, making mortgage approval much harder.
If you have student loans, it is critical to check your loan status and make sure your payments are current before applying for a mortgage.
Should You Buy Now or Wait?
Ultimately, the decision comes down to your personal financial situation, readiness, and goals.
Musson advises buyers to stay active in their search even if they are not ready to make an offer right away. "You do not have to buy right now, but if you are looking, you will be more likely to find a house that meets your needs for an affordable price," she said.
If you are financially prepared, have a solid credit score, and find a home that fits your budget, buying now could position you to secure a better price and refinance to a lower rate when the opportunity arises.
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