Mortgage Rates Hover Near 3-Year Lows: Is Now Finally the Time To Buy or Refi?
Written by
Gabriel Vito
Edited by
Jenna Klaverweiden
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Mortgage rates have eased in recent months, hovering near levels not seen in roughly three years. Data from Freddie Mac’s Primary Mortgage Market Survey shows the average rate on a 30-year fixed mortgage has retreated from its recent highs, reopening the conversation for buyers who paused plans during last year’s higher rates and homeowners wondering whether refinancing finally makes sense.
Lower rates alone, however, have not resolved affordability challenges. For many households, the question is no longer whether rates are down, but whether they are low enough to make acting now financially worthwhile.
What ‘Near 3-Year Lows’ Actually Means
Mortgage professionals say many buyers misunderstand what “lower” rates really imply.
“A big misconception is that when social media or headlines say ‘rates are lower,’ it means they’ve dropped enough to suddenly make homes affordable for a lot more people,” said Felicia Morales, a real estate and mortgage broker at Lumina Real Estate & Lending. “In reality, today’s ‘lower’ is often just lower than yesterday, last week, or last month — not back to the 2%-4% golden era people remember.”
Morales said many buyers overestimate how much a small rate change affects their payment or borrowing power. “The truth is, the modest shifts we’ve been seeing usually don’t move the needle as much as lower home prices would,” she said.
When rates fall, demand often increases. “That often pushes prices up. So, in many cases, buyers end up with a similar monthly payment — just at a lower rate on a higher-priced home,” Morales said.
Waiting for Rates vs. Acting Now
For buyers focused on market timing, economists say execution often matters more than waiting.
“Buyers don’t realize that there’s not ‘a’ mortgage interest rate: they can shop around to find out which lender or broker will give them the lowest rate,” said Brad Case, chief residential economist at Homes.com.
In an empirical study, buyers who shopped around saved an average of 11 basis points on their mortgage rate, Case said. “Buyers worry about ‘is this the right time to move, or can I get a lower rate by waiting?,’ but they would have to wait several weeks to save as much as they could save right now just by making a few calls,” he said.
In short, comparing lenders can often lead to bigger savings than waiting for rates to fall.
Should You Buy Now?
Whether now is the right time to buy depends on more than interest rates alone, said Benjamin Schieken, a mortgage professional and founder of Fincast.
“This is the age-old question of trying to time the market, and interest rates are only one part of the equation,” Schieken said. “Affordability is about much more than just the rate. It’s about availability.”
Lower rates can help, he said, but they should not be the sole reason someone decides to buy. “Lower rates absolutely help, and rates being at a three-year low does make things more affordable in many cases,” he said. “But it shouldn’t be the sole reason someone decides to buy.”
Preparation matters, Schieken said. “To take advantage of low rates, you need to already be in the process,” he said. Lower rates tend to benefit buyers who are already prepared.
Life events also continue to drive many purchases. “Marriages, divorces, having kids, downsizing, job changes — you can’t always wait for the perfect rate in these cases,” Morales said.
When Refinancing Still Makes Sense — and When It Doesn’t
For many homeowners, refinancing opportunities remain limited.
“There aren’t many homeowners right now who’ll be able to save money by refinancing, and there’s no reason to think that situation will change this year,” Case said.
Schieken said refinancing costs typically run between 1% and 3% of the loan amount. “The new loan has to be meaningfully better than the existing one for refinancing to make sense,” he said.
Notably, affordability has improved over the past year largely for reasons unrelated to rates. “Affordability has improved over the past year, but mostly not because of lower mortgage interest rates,” Case said. “What has improved affordability is growth in incomes.”
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