With mortgage rates hovering around 7% in mid-2025, many homebuyers and current homeowners are left asking: Is now a good time to buy or refinance?
The housing market has shifted dramatically from the ultra-low rates of 2020–2021. While 7% might feel high compared to those years, context and strategy matter more than headlines.
Let’s break down what’s happening, who should wait, and who might still benefit from buying or refinancing today.
What’s Causing Mortgage Rates to Stay at 7%?
Mortgage rates are influenced by multiple factors, including:
- Federal Reserve policy
- Inflation and economic data
- Bond market activity (10-year Treasury yield)
In response to lingering inflation, the Federal Reserve has kept interest rates higher for longer. As a result, 30-year fixed mortgage rates are holding around 7%, compared to under 3% just a few years ago.
Should You Buy a Home at 7%?
Reasons to Consider Buying Now
- You’re financially ready: If you have a steady income, healthy savings, and plan to stay long-term, waiting could mean missing out on equity growth.
- Less competition: Higher rates have cooled demand, so there may be more room to negotiate price, closing costs, or even seller concessions.
- You can refinance later: Buy the house now, refinance when rates drop — many lenders are promoting “buy now, refi later” deals.
Reasons You Might Wait
- Monthly payments are higher: A $400,000 loan at 7% has a monthly payment ~$500 higher than at 4%.
- Affordability is stretched: Combine high rates with high home prices and many buyers are priced out.
- Uncertain job market: If your income isn’t stable, buying now may put too much strain on your budget.
Should You Refinance at 7%?
Refinancing typically only makes sense if you can:
- Lower your interest rate (not likely if your current rate is below 6%)
- Change loan terms (e.g., refinance a 30-year to a 15-year to build equity faster)
- Tap equity through a cash-out refinance
When It Might Still Make Sense:
- You’re in an ARM (Adjustable Rate Mortgage) with a reset coming soon
- You need to remove PMI and have enough equity
- You want to consolidate high-interest debt (carefully)
Otherwise, if you already have a rate under 5%, refinancing now likely won’t save you money.
What You Can Do in the Meantime
- Build your credit to qualify for the best future rates
- Increase your down payment to lower your loan-to-value ratio
- Explore first-time buyer programs with down payment or rate assistance
- Lock in rates wisely — some lenders offer float-down options
Final Thoughts
Yes, 7% mortgage rates may seem steep, but for some buyers, this market still presents opportunities. Don’t let fear paralyze your decision — base it on your personal financial health, not just today’s rate.
If you’re in a stable position and plan to stay in the home long-term, buying now could still be a smart move. If you’re unsure, focus on saving, budgeting, and preparing to strike when rates fall.
As always: the best time to buy is when you’re financially ready — not just when the market says so.
Let me know if you’d like a version focused specifically on first-time homebuyers, or a follow-up post comparing 15-year vs. 30-year mortgage strategies.