Mortgage Rates Just Crossed 7%. Here's How I'd Think About Buying Right Now.

How we got here

At the start of this year, a lot of people expected mortgage rates to drift lower. The Fed had cut rates in 2024 and 2025, and the story was that more cuts were coming.

Then the conflict with Iran started in February. Energy prices jumped. Inflation, which had been cooling, picked back up. And long-term interest rates started climbing and haven't really stopped since.

On September 16, the Federal Reserve raised its benchmark rate for the first time since 2023. A week later, the 10-year Treasury yield hit about 5.1%, the highest since 2007. And mortgage rates followed.

Here's the piece that trips a lot of people up. Mortgage rates don't follow the Fed directly. They follow the 10-year Treasury yield much more closely. The 10-year moves on what investors expect for inflation, economic growth, and government borrowing years into the future. So even if the Fed stopped raising rates tomorrow, mortgage rates could stay high if investors are still worried about inflation or the deficit.

In plain terms: the Fed isn't going to rescue mortgage rates on its own. It doesn't have that dial.

What 7% does to your payment

Numbers help here, so let's run a hypothetical.

Let's say you're buying a $400,000 home and you put 20% down. That's an $80,000 down payment and a $320,000 loan on a 30-year fixed mortgage. Here's what the monthly principal and interest looks like at different rates:

Compared to a year ago, that same loan costs about $155 more per month. That's roughly $1,856 a year, every year, for as long as you keep the loan.

Compared to a 3.5% mortgage from a few years ago, it's about $698 more per month.

And that's just principal and interest. It doesn't include property taxes, homeowners insurance, flood insurance if you need it, or HOA fees. Here in Florida, those extra costs can be a big part of the total, sometimes as much as the loan itself. I'll come back to that.

One more number to sit with. Over 30 years at 7.03%, that $320,000 loan would cost about $449,000 in interest if you kept it the full term and never paid extra. Most people don't keep a mortgage for 30 years. They sell or refinance. But it's a reminder that the rate isn't a small detail.

Why nobody is selling

If you've noticed fewer homes for sale in your neighborhood, there's a reason for that too. It's called the lock-in effect.

Roughly half of all outstanding mortgages in the country have a rate at or below 4%. A lot of those people bought or refinanced when rates were at historic lows in 2020 and 2021.

Now think about it from their side. Let's say someone has a $350,000 balance at 3.5%. If they sell and buy a similar house, they'd be taking out a new loan at 7%. Their monthly payment could jump by hundreds of dollars for basically the same house. So a lot of them just stay put.

That keeps the number of homes for sale low. Which keeps prices from falling as much as you'd expect with rates this high. Which makes buying harder. It's a loop.

The lock-in effect is loosening, slowly. People still move for jobs, family, divorce, retirement, health. Life doesn't wait for rates. But it's a big reason the housing market feels stuck.

The part that isn't all bad

Here's something you won't hear much in the headlines. For buyers, 7% rates aren't only bad news.

When rates jump, some buyers step back. That gives the buyers who stay in the market more negotiating power. The chief economist of the National Association of Realtors said this week that housing affordability is actually improving, as sellers cut asking prices on active listings. He also said buyers and sellers should probably accept 7% as the new normal.

Now, I'm not going to tell you whether 7% is the new normal. I don't know that. But I do know that a higher rate on a lower price isn't automatically worse than a lower rate on a higher price. And a price is locked in forever, while a rate can sometimes be refinanced later.

That leads to a phrase you've probably heard.

"Marry the house, date the rate"

A lot of real estate agents like to say this. The idea is to buy the house you want now, accept the higher rate, and refinance when rates fall.

There's some truth in it. If rates do come down meaningfully, refinancing can lower your payment.

But I want to be honest about the risk. Refinancing depends on things you don't control. Rates have to actually fall. Your home has to hold its value. Your credit and income have to still qualify. And refinancing costs money, usually thousands of dollars in closing costs.

So if you're buying at 7%, I'd plan around the payment you can afford at 7%. If a refinance opportunity shows up later, great. That's a bonus. But if your budget only works if rates drop, that's not a plan. That's a hope.

Buy, wait, or rent? How I'd think about it

There's no single right answer here. It depends on your situation. But these are the questions I'd work through if I were in your shoes.

1. How long are you planning to stay?

Buying a home has big upfront costs. Closing costs, moving costs, furniture, repairs. And when you sell, there are selling costs, usually including agent commissions.

If you're going to be in the home for a long time, those costs get spread out over many years. If you might move in two or three years, those costs can wipe out any benefit of owning. A common rule of thumb is that buying starts to make more sense the longer you plan to stay, often five years or more. It's not a law, but it's a useful starting point.

2. What's the full monthly cost, not just the mortgage?

Principal and interest is only part of the payment. In Florida especially, the rest can be significant:

• Homeowners insurance. Florida insurance costs have been among the highest in the country, though some carriers have filed for rate decreases recently.
• Flood insurance. Depending on the location, this can be required or strongly worth considering.
• Property taxes. These depend on the county and whether you qualify for the homestead exemption.
• HOA or condo fees. Some condo associations have raised fees or charged special assessments to cover insurance and building repairs.

Weak demand in the condo market, driven partly by those rising insurance costs and HOA fees, has been one of the main reasons Florida home prices have been softer than the national market.

So when you compare buying to renting, compare the full cost of owning to the full cost of renting. Not the mortgage to the rent.

3. What happens to your emergency fund after closing?

This one gets overlooked. A lot of people put everything they have into the down payment and closing costs, and then move into a house with nothing left in the bank.

Then the AC goes out in July. Or the roof needs work. Or a job changes.

Before you buy, I'd want to see a real cushion left over after closing. Enough to cover several months of the full housing payment plus a repair or two. A house with no cash behind it is stressful, and stress leads to bad money decisions.

4. Does the payment work if nothing changes?

Like I said, plan for the payment you're signing up for. Not the payment you hope to get after a refinance. Not the raise you think is coming. The payment on the paper in front of you, with the income you have today.

If the answer is yes, and you plan to stay a while, buying at 7% can still make sense. If the answer is "only if," that's worth listening to.

5. Is renting really "throwing money away"?

You'll hear this a lot. And I get the feeling behind it. But it's not quite right.

When you rent, you're paying for a place to live, flexibility, and not being on the hook for the roof, the insurance, and the property taxes. When you own, a big part of your early mortgage payments goes to interest, not equity. Interest, taxes, insurance, and maintenance don't build wealth either.

Renting can make a lot of sense if you might move soon, if the numbers for owning don't work yet, or if you'd rather keep your money flexible while you build savings. Owning can make a lot of sense if you plan to stay, the full monthly cost fits your budget, and you still have a cushion after closing.

Neither one is a moral choice. It's a math choice and a life choice.

Ways people are working around high rates

If you do decide to buy, here are some of the ways buyers are handling 7% rates right now. Each one has trade-offs.

Shopping lenders

This sounds simple, but it matters. Freddie Mac regularly points out that getting quotes from multiple lenders can save buyers thousands. Rates and fees vary more than people think. Getting at least three quotes on the same day, for the same loan, lets you compare fairly.

Buying down the rate with points

Lenders let you pay money upfront, called points, to get a lower rate. One point costs 1% of the loan amount.

Let's say, hypothetically, that on our $320,000 loan, one point costs $3,200 and lowers your rate by a quarter point, from 7.03% to 6.78%. That would cut your monthly payment by about $54. At that pace, it would take about 60 months, or five years, to earn back the $3,200.

So points can make sense if you plan to keep the loan well past the break-even point. If you might sell or refinance sooner, you may never earn it back. The actual price of points varies by lender, so run the math with real quotes.

Seller concessions

In markets where sellers are cutting prices, some are also willing to pay part of the buyer's closing costs or fund a rate buydown. That's something to ask about, especially on homes that have been sitting on the market.

Adjustable-rate mortgages

Adjustable-rate mortgages, or ARMs, have been getting more popular as buyers look for a lower starting payment. An ARM usually has a fixed rate for a set number of years, like five or seven, and then adjusts based on market rates.

The appeal is a lower payment up front. The risk is that the payment can go up after the fixed period ends, and you don't know how much. If you're considering an ARM, it's worth understanding exactly how high the rate can go, how often it can change, and whether you could afford the payment at its maximum.

A 15-year mortgage

The 15-year fixed rate is lower, at 6.42% right now. But the payment is much higher because you're paying the loan off in half the time. On our $320,000 example, the 15-year payment would be about $2,773 a month. That works for some people and not for others. The benefit is a lot less total interest and a paid-off house much sooner.

If you already own a home

If you already have a low fixed rate, a 7% market doesn't hurt you directly. Your payment stays the same.

But there are a couple of things worth thinking about.

Home equity. A lot of homeowners have more equity than they realize, because prices rose so much over the past several years. Some people use HELOCs to tap that equity. Just know that HELOC rates are usually variable, so they tend to go up when the Fed raises rates. Borrowing against your home to pay for things that don't hold value is a risk worth thinking hard about.

Moving later in life. For retirees and people getting close to retirement, the question isn't always about the mortgage. It's about whether the house still fits your life, your budget, and your plans. Selling a home with a low rate and buying a smaller one, or buying with cash, or renting in retirement, are all choices with real trade-offs. They're worth thinking through before a life event forces the decision.

A note on Florida specifically

Florida's housing market has been different from the national market for a while now. Prices in a lot of Florida metros have been soft, especially for condos, as insurance costs and HOA fees have climbed.

There's also a proposed constitutional amendment on the November ballot that would change the homestead exemption for property taxes. I'm not going to tell you how to vote on it, and I'll explain what it would and wouldn't do in a separate post. But if you're buying a home in Florida this year, it's one more thing worth understanding, because property taxes are part of the full monthly cost.

What I'm not going to do

I'm not going to tell you mortgage rates are about to fall, and I'm not going to tell you they're about to go higher. Nobody knows that. If someone tells you with confidence where rates will be next spring, they're guessing.

I'm also not going to tell you that now is the perfect time to buy, or that waiting is always smarter. The perfect time to buy is when the numbers work for your life, you plan to stay long enough, and you still have a cushion left after closing. That's true at 3% and it's true at 7%.

When it comes down to it, the rate matters. But your time horizon, your full monthly cost, and your emergency fund matter more.

The short version

• The average 30-year fixed mortgage rate hit 7.03% on September 24, the first time above 7% since January 2025.
• Mortgage rates follow the 10-year Treasury more than the Fed. The Fed can't fix mortgage rates on its own.
• On a $320,000 loan, 7.03% costs about $155 a month more than 6.30% did a year ago.
• About half of homeowners have a rate at or below 4%, which is keeping homes off the market.
• Some sellers are cutting prices, which gives buyers more room to negotiate.
• Plan for the payment you can afford today. Treat a future refinance as a bonus, not a plan.
• In Florida, insurance, flood coverage, taxes, and HOA fees can change the math a lot.

If you're weighing a home purchase and want to see how it fits with the rest of your finances, your retirement, your savings, and your cash cushion, I'm happy to walk through it with you.

Frequently asked questions

What is the current 30-year mortgage rate?

According to Freddie Mac, the average 30-year fixed mortgage rate was 7.03% as of September 24, 2026. The 15-year fixed was 6.42%. Individual rates depend on your credit, down payment, and loan type.

Why are mortgage rates going up if the Fed only raised rates a quarter point?

Mortgage rates follow the 10-year Treasury yield more than the Fed's overnight rate. The 10-year has climbed to its highest level since 2007 on inflation concerns, so mortgage rates have risen along with it.

Should I wait for mortgage rates to drop before buying?

It depends on your situation. Waiting can make sense if the numbers don't work yet or you might move soon. Buying can make sense if you plan to stay for years, the full monthly cost fits your budget, and you'll still have savings after closing. Nobody can reliably predict when rates will fall.

Is it worth paying points to lower my mortgage rate?

Points can make sense if you plan to keep the loan past the break-even point, which is how long it takes for the monthly savings to cover the upfront cost. If you might sell or refinance before then, you may not earn the cost back.

What is the mortgage lock-in effect?

The lock-in effect describes homeowners with low mortgage rates who don't want to sell, because buying another home would mean taking on a much higher rate. About half of outstanding mortgages have rates at or below 4%, which keeps many homes off the market.

Educational content only. Not individualized investment, tax, legal, or lending advice. Payment examples are hypothetical and for illustration only; actual rates, points, and payments depend on your lender and your situation. Benowitz Wealth Management is a brand of Joy Financial Group LLC, a Florida state-registered investment adviser. Joy Financial Group LLC is not a mortgage lender or broker.

Neither Joy Financial Group LLC nor Benowitz Wealth Management is affiliated with, endorsed by, or employed by the Florida Retirement System, the Florida Division of Retirement, the State Board of Administration of Florida, MyFRS, or any government agency. FRS members may obtain free, unbiased guidance from the MyFRS Financial Guidance Line at 1-866-446-9377.