Mortgage rates just hit 7.28%. But there are ways to get a lower rate

Rising Mortgage Costs Put More Pressure on Home Buyers

Earthguardiansonline.com – Home shoppers are confronting a sharper increase in borrowing costs after the average rate on a 30-year fixed mortgage climbed to 7.28% this week. That is up from 7.03% a week earlier and marks the sixth consecutive weekly increase in mortgage rates.

Freddie Mac data released Thursday showed the largest weekly rise in almost four years. The average rate has now reached its highest point since November 2023, adding urgency and uncertainty for buyers trying to determine whether to purchase now or wait.

Higher rates can reduce competition from buyers who are especially sensitive to financing costs. Yet for households that need a mortgage, the immediate consequence is usually a more expensive monthly payment than they would have faced only months ago.

Why rates are moving higher

Mortgage rates tend to follow movements in the bond market, particularly the yield on the 10-year Treasury note. That yield has risen in recent months as investors weigh concerns that the Iran war and greater government spending could add to inflationary pressure.

If inflation remains difficult to contain, markets may expect the Federal Reserve to keep interest rates higher for a longer period. Those expectations can filter through to mortgage lending, even though mortgage rates do not move in lockstep with the Federal Reserve’s policy rate.

A rate above 7% does not mean every borrower will receive the same offer. Individual loan pricing can differ substantially based on credit history, debt levels, the size of the down payment and the type of mortgage selected.

Lower-Rate Options Can Come With Trade-Offs

The 30-year fixed-rate mortgage remains the most common choice because it spreads payments over a longer period and locks in a predictable interest rate. Its stability can be valuable when rates are elevated or volatile, but it is not the only financing path available.

A 15-year mortgage often carries a lower interest rate than a 30-year loan. The trade-off is a considerably larger monthly payment because the balance must be repaid in half as much time. Buyers considering this route need to make sure the higher payment still leaves room for regular household expenses and unexpected costs.

Adjustable-rate mortgages, or ARMs, have also gained attention as the gap between their introductory rates and fixed-rate loans has widened. Joel Kan, deputy chief economist at the Mortgage Bankers Association, said ARM loans had rates roughly 80 basis points below fixed-rate loans and represented 10.3% of applications in the latest weekly data. That was the largest share since October 2025.

An ARM typically begins with a fixed rate for five, seven or 10 years. After that introductory period, the loan can reset based on prevailing market rates. The lower starting rate may help some borrowers, but it also introduces the possibility that payments could rise substantially later.

“It may work well for some borrowers who are expecting to move or refinance in four or five years,” said Jeremy Luke, a divisional director at Chase Home Lending. “It may not work for all.”

That distinction is important. ARMs were among the mortgage products associated with heightened housing-market risk before the 2008 financial crisis. They can be appropriate in limited situations, but borrowers should understand how and when the rate may change before relying on a lower introductory payment.

Assumable Loans May Offer Another Path

Some buyers may be able to assume an existing mortgage from the home’s seller. This means taking over the seller’s remaining loan, potentially including a rate that was secured when borrowing costs were much lower.

Many government-backed mortgages can be assumed, including loans backed by the Federal Housing Administration, the Department of Veterans Affairs and the Department of Agriculture. Not every mortgage is eligible, and the approval process can take longer than a standard purchase loan.

There is also an important cash consideration. An assumable mortgage covers only the seller’s remaining balance, not the full purchase price. If the home has appreciated significantly or the seller has paid down much of the loan, the buyer may need a large amount of cash to bridge the difference.

Buying Down the Rate

Borrowers who have compared lenders and still find the available rates unattractive may be able to pay additional money at closing in return for a lower rate. A permanent buydown lowers the rate for the full life of the loan. A temporary buydown reduces it only for the first few years and can cost less initially.

The right choice depends on how long the buyer expects to keep the mortgage and whether the upfront expense fits comfortably within the overall budget. Jeff DerGurahian, head economist at loanDepot, cautioned against using so much money for a lower rate that day-to-day financial flexibility is compromised.

“You don’t want to put so much money down that you can’t do what you need to do to live in your house and live day-to-day,” he said.

Sellers and home builders may sometimes help fund a rate buydown. Builders have increasingly relied on incentives to support sales of newly constructed homes, including closing-cost credits and mortgage-rate concessions. In September, 66% of builders said they were using sales incentives, up from 63% in August and the highest share since December, the National Association of Home Builders’ sentiment survey found.

Local Market Conditions Still Matter

Buyers should look beyond national rate averages and assess conditions in their own market. Where the number of available homes exceeds buyer demand, purchasers may have more leverage to ask for concessions, price reductions or assistance with closing costs.

That bargaining power can matter more when financing costs are high. A motivated seller may be willing to contribute toward a buydown or other expenses if doing so helps complete a sale. In a more competitive market, buyers may have fewer opportunities to negotiate such terms.

With rates rising, the most useful approach is often to compare loan offers carefully, examine the long-term cost of each option and avoid stretching a budget merely to secure a home. A lower advertised rate can be valuable, but the payment structure, upfront cash requirement and future interest-rate risk deserve just as much attention.