What homebuyers should do if mortgage rates don’t fall

Homebuyers hoping for an imminent reduction in mortgage interest rates saw their hopes dashed this month when the newest report from the Bureau of Labor Statistics showed inflation higher than expected. That January report followed a disappointing December one, underlining that more work needs to be done before the Federal Reserve hits its target 2% goal (inflation currently sits at 3.1%).

Elevated inflation means the benchmark interest rate range will likely remain unchanged from its current 23-year high and, accordingly, mortgage interest rates will stay high, too. While rate cuts were hoped for as early as March, it’s possible they won’t come now until May or even June.

Against this backdrop, homebuyers eager to act have limited options — but there are still some viable paths to take now. Below, we’ll break down three things homebuyers should do if mortgage rates don’t fall soon.

Start by exploring your mortgage rate options here to see what you could qualify for.

What homebuyers should do if mortgage rates don’t fall

Here are three things homebuyers should do if mortgage rates don’t fall.

Consider their options

Because mortgage rates are high right now it doesn’t mean you still can’t secure a below-average rate. It’s easy to get a mortgage rate half a percentage point lower than the median rate simply by purchasing mortgage points from your preferred lender. But you may also get a lower rate by starting with an adjustable-rate mortgage — and refinancing to a lower, fixed rate in the future. 

While neither option will resurrect the 3% rates that could have been secured in recent years, every dollar will count. And even a mortgage rate half a point lower could result in tens of thousands of dollars saved over the life of your loan.

Learn more about your mortgage rate options here now.

Boost your credit score

Remember that most advertised mortgage interest rates are for lenders with the highest credit scores and cleanest credit profiles. So if you don’t have both, you’ll likely get a rate that’s even higher than today’s average 7.29%. So, before applying — or while waiting for some positive movement in the mortgage rate environment — do all you can to boost your credit score. This can involve paying off debt, making monthly payments on time (or early) and, perhaps most importantly, refraining from applying for new credit (and, thus, dinging your credit score in the interim).

Buy a home anyway

Sure, today’s rates aren’t ideal, particularly compared to the recent past. But, historically, according to Freddie Mac data, they’re in line with what homebuyers could usually expect. So don’t wait around for a perfect rate because it may not come around again anytime soon. Instead, buy a home anyway. This will ensure that you don’t lose out on your dream home, should it come on the market now. 

But it could also mean moving your monthly payments from renting to owning, ensuring your money doesn’t go to waste. Plus, if rates drop before you close you could always unlock and relock to the new, lower rate — or you can refinance in the future if the rate environment stabilizes. 

Get started today.

The bottom line

Today’s mortgage rate environment is elevated and the forecast for rate reductions is unclear. With this understanding, homebuyers should make some strategic moves now. This includes exploring all potential options to secure a below-average rate while also improving their credit to make sure that they can qualify for the lowest rate available. Finally, it may require acting anyway, even if the rate climate is imperfect, in order to stop paying rent and start building equity for the future.