Many buyers are currently putting their plans on hold, hoping that mortgage rates will drop again, possibly even returning to the historic low of 3% we saw a few years back. However, it’s important to remember that those low rates were never intended to stick around. They were a temporary solution for a specific situation. As the market stabilizes, it’s a good time to adjust our expectations accordingly.

In 2020 and 2021, mortgage rates at 3% really helped buyers by making homes more affordable and giving them greater buying power. However, those low rates were part of emergency measures taken during the peak of the pandemic. Now that the economy has changed, we're looking at mortgage rates between the high 6% and low 7% range.

Experts are expecting a minor dip in rates in the coming months, but most industry leaders are on the same page: we probably won't see rates return to 3%.

Many experts believe that mortgage rates will likely settle in the mid-6% range by the end of the year, assuming there aren’t any significant changes in the economy. As Kara Ng, Senior Economist at Zillow, points out:

““While Zillow expects mortgage rates to end the year near mid-6%, barring any unforeseen shocks, that path might be bumpy.”
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— Kara Ng, Senior Economist at Zillow

What Buyers Should Know

Waiting for those 3% interest rates could take longer than you think, and you might miss some great opportunities in the meantime. Instead of putting off buying a home for an unknown period, it's better to create a plan and concentrate on what you can manage: your budget, your credit, and collaborating with a reliable expert who can clarify the current market conditions and guide you through the process.

Having a local real estate agent and a reliable lender by your side really changes the game. They know about down payment assistance programs, different financing options, and effective negotiation tactics. Essentially, their expertise provides you with the insights needed to find creative solutions that can help make your plans a reality.

The most important point to remember is that if interest rates are expected to drop a bit later this year, we might see more buyers re-entering the market. By acting now, you can get ahead, especially since there are more homes available than we’ve seen in a long time.

Think about it: if mortgage rates drop, what do you think will happen? Exactly – everyone else will likely jump back into the market as well.

Getting ahead of the competition can really help you find the right home with less hassle. Realtor.com captures this idea perfectly:

““Staying out of the market in hopes of a rate drop that never comes can lead to missed opportunities . . . Rising home prices, rent increases, and inflation might outpace any future savings on interest. And if rates do fall sharply again, buyers could face an entirely different challenge: surging competition.”
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— Realtor.com

Bottom Line

Those 3% rates that everyone talks about from a few years back were actually an exception, not the norm.

As they get comfortable in this new area, it's a great opportunity to recalibrate your expectations and understand the direction the market is taking as it evolves.

A local real estate agent and a reliable lender will be your go-to resources. They'll keep you informed and up-to-date, helping you understand your options and create a plan that suits your needs.