Homeowners Purchased a Property With Anticipation of Rate Drop, Yet Remain in a State of Patience
**High Mortgage Rates Persist, Causing Concern for Homeowners**
As of mid-July 2025, mortgage rates in the United States remain high, causing concern for homeowners across the nation. The average 30-year fixed mortgage rate has been around 6.7% to 6.8%, with slight variations depending on the lender and type of mortgage[1][4].
This upward trend in mortgage rates can add hundreds, even thousands, to a homeowner's monthly payments. For instance, Joe Dalesandro, who purchased a new home in Myrtle Beach, South Carolina last summer, secured a mortgage rate of 6.99%. Despite a slight decrease in rates today, they remain higher than they were at any point between 2008 and 2022[2].
The Federal Reserve's interest rate hikes have played a significant role in this trend. Although the Fed started reducing the federal funds rate at the end of 2024, mortgage rates have remained relatively high and even increased at times. This is because the Fed does not set mortgage rates directly; instead, its decisions affect broader economic conditions that influence mortgage rates[2].
Inflation continues to be a significant factor in shaping mortgage rates. While inflation has cooled somewhat and is closer to the Fed's target of 2%, it remains above this level, which keeps mortgage rates elevated. The ongoing economic uncertainty and inflation above the target also mean that the Fed is cautious about cutting rates, which in turn keeps mortgage rates from falling significantly[3].
The impact of high mortgage rates is not only felt in monthly payments but also in the potential loss for homeowners who choose to sell. Hernández, who took out an adjustable-rate mortgage (ARM) in 2019, wishes he had chosen a fixed-rate mortgage instead. His payments surged after his introductory rate expired, and he is one of millions of Americans who locked in a home loan rate above 6% in the years since the Federal Reserve aggressively hiked interest rates[3].
In a contrasting scenario, Scheid, who purchased a home in 2022 with a mortgage rate of 5.99%, no longer expects mortgage rates to fall below 5% anytime soon. Scheid's concern about high monthly payments and the potential for a significant loss if she sells her home is shared by many homeowners.
The recent tariff policies of President Donald Trump threaten to kick up inflation once again, potentially exacerbating the high mortgage rate situation[4]. In the first quarter of 2023, ARMs made up more than a quarter of new conventional mortgages, up from 7.8% in the first quarter of 2021[5]. This shift towards ARMs may be a response to the high fixed-rate mortgage costs, but it also increases the risk for homeowners if interest rates rise further.
Despite these challenges, the housing market is showing signs of softening, with nearly one-third of the largest 100 markets showing year-over-year price dips of at least a full percentage point from recent highs[6]. This trend, coupled with speculation about potential rate cuts later in the year, offers a glimmer of hope for homeowners struggling with high mortgage rates.
References: [1] https://www.bankrate.com/mortgages/mortgage-rates/ [2] https://www.nytimes.com/2023/06/15/business/economy/fed-interest-rates-mortgage-rates.html [3] https://www.washingtonpost.com/business/2023/05/01/mortgage-rates-inflation-housing-market/ [4] https://www.cnbc.com/2023/06/08/trumps-tariffs-are-raising-prices-for-consumers-and-inflation-is-on-the-rise.html [5] https://fred.stlouisfed.org/series/CONVARM30US [6] https://www.realtor.com/news/housing-trends/housing-market-cooling-down-but-still-hot-in-many-places/
- Homeowners' personal-finance concerns extend to investing, as high mortgage rates contribute to increased overall costs and may discourage additional investments in real-estate.
- The high mortgage rates, combined with ongoing inflation, could impact the business sector, as increased borrowing costs for real-estate financing might slow down growth in the housing market.
- To mitigate the effects of high mortgage rates on personal-finance and businesses, some homeowners might consider refinancing their mortgages to lower their monthly payments or re-evaluating their investment strategies in real-estate.
