Mortgage Rates Reach 7%

The average 30-year fixed mortgage rate rose to 7.03% for the week ending September 24, up from 6.95% the previous week and 6.30% a year ago, according to Freddie Mac.

The increase follows several weeks of rising borrowing costs, influenced in part by higher Treasury yields. While higher rates can raise monthly mortgage payments, they do not tell the entire story of today's housing market.

Buyers May Have More Negotiating Power

The return of 7% rates comes as the housing market enters a season when buyer competition typically begins to ease. With some sellers facing less competition for their listings, buyers may have more room to negotiate.

Depending on the property and transaction, buyers may be able to negotiate:

• A lower purchase price

• Seller-paid closing costs

• Repairs or other concessions

• A mortgage rate buydown

These options can potentially help reduce upfront expenses or make the monthly payment more manageable.

Are Adjustable-Rate Mortgages an Option?

Some borrowers are also considering adjustable-rate mortgages (ARMs) as fixed rates remain elevated. According to the Mortgage Bankers Association, the average contract rate for a 5/1 ARM was 6.10% the previous week, compared with 7.12% for a 30-year fixed conforming mortgage.

An ARM may offer a lower initial rate, but the interest rate can adjust later according to the loan's terms. Buyers should understand how future adjustments could affect their payments before choosing this type of financing.

Should You Wait for Rates to Fall?

Waiting for mortgage rates to decline may seem appealing, but future rate movements are difficult to predict. In the meantime, buyers may find opportunities through home price negotiations, seller concessions, or different financing structures.

The best approach is to evaluate what fits your budget today while considering your longer-term plans. If rates become more favorable in the future, refinancing may be an option for eligible homeowners.

The Bottom Line

Mortgage rates above 7% are an important consideration, but they are only one part of the homebuying equation. Home prices, seller negotiations, loan options, and your personal financial situation can all affect the overall cost of buying a home.

If you're considering buying this fall, a Premier Plus Lending loan officer can help you compare financing options and payment scenarios so you can make an informed decision based on your goals.