Why Waiting for Lower Mortgage Rates Could Cost You

By Ted Holmes

Edward “Ted” Holmes is a Licensed Associate Real Estate Broker and founder of The Holmes Team at William Raveis Real Estate, serving Chappaqua and Northern Westchester County, NY. With 25 years licensed, 456 career transactions, and consistent top-ranking production statewide, he is a recognized expert in residential, luxury, and commercial real estate.

A lot of buyers right now are waiting for mortgage rates to fall back before they make a move. If that’s your plan, it’s worth knowing that a return to 3% almost certainly isn’t coming, and building your decision around it could keep you on the sidelines far longer than you expect.

The gap between what buyers hope for and what forecasters predict is striking. In one recent survey, 42% of prospective buyers said they expect average rates to drop below 5% this year. The economists who do this for a living see it very differently. Groups like Fannie Mae, the Mortgage Bankers Association, and Wells Fargo generally expect rates to hold in the low-to-mid 6% range through at least the middle of 2027. That’s not a decline anyone should plan their life around. It’s a plateau.

Inflation is the reason those forecasts stay grounded. Rates and inflation tend to move together, and after a relatively stable stretch from mid-2023 into late 2025, inflation has been climbing again. As long as that pressure holds, it pushes directly against any meaningful drop in rates. So when a prediction of rates in the 4s starts circulating, the useful question is what would actually have to happen in the economy to get there, because the current data isn’t heading that direction.

It also helps to question the assumption underneath all of this, that today’s rates are somehow high. They aren’t, at least not by any historical measure. The sub-3% rates of the pandemic were the exception, not the rule. Over the past several decades, the 30-year fixed has spent most of its time between roughly 5% and 10%, averaging close to 8% since the 1970s. Against that backdrop, a rate in the 6s is ordinary. Buyers who treat 3% as the benchmark are measuring today against a moment that was never normal to begin with.

The good part is that a higher rate environment doesn’t mean paying more than you have to. There are real tools for lowering a monthly payment, and this is where the right guidance earns its keep. An adjustable-rate mortgage can carry a lower rate in the early years, which fits buyers who don’t plan to stay in the home for decades. A buydown, paying points up front, can permanently reduce the rate, and in some deals a seller will agree to cover that cost.

In the right situation, an assumable mortgage lets a buyer take over the seller’s existing loan at its lower rate, which can be a genuine advantage. Which of these makes sense comes down to the specifics of your situation, and that’s a conversation worth having before you resign yourself to waiting.

Waiting carries a cost that’s easy to overlook. While you hold out for a rate that may never arrive, prices in a strong market like ours tend to keep rising, and a higher purchase price can quietly erase the monthly savings you were waiting for. Every month on the sidelines is also a month of equity you never got to build.

Having spent eight years earlier in my career as a licensed mortgage broker, I’ve consistently seen that the buyers who come out ahead rarely try to time the market perfectly. They make a sound decision based on what’s true today.

If you’ve been holding off, the stronger move isn’t to keep waiting on a number the forecasts don’t support. It’s to take an honest look at your budget, your options, and the strategies that could make buying work for you now. Let’s have that conversation. Call or text me at 914-548-6179, email ted.holmes@raveis.com, or visit blog.theholmesteamny.com, and we’ll figure out what actually makes sense for you.