Mortgage Rates Are at 15-Month Highs—but Waiting To Buy May Backfire, Study Finds

The average rate for a 30-year fixed mortgage hit a 15-month high of 6.76% last week, increasing from the previous week’s average rate of 6.71%.

While potential buyers often wait for high rates to fall, buying immediately resulted in a better outcome than waiting for potential market improvements in 61% of scenarios, according to a new historical analysis from top wholesale lender AD Mortgage.

The national mortgage broker analyzed home prices, mortgage rates, and the median household income in all 50 states and Washington, D.C., between the years of 2000 and 2022 to determine whether homebuyers benefitted from waiting two years to make a purchase while accumulating additional savings.

The scenario with the lower total purchase and financing cost was considered the favorable outcome. Across all years and all 50 states and D.C., buying immediately outperformed waiting in 61% of scenarios.

Florida and California had the highest immediate buying advantages at 74%, which AD Mortgage attributed to long-term home price growth in the two states. West Virginia had the lowest buy-now advantage at 39% and was one of only two states where the buying advantage was under 50%.

At different periods of the study, waiting proved to be beneficial. From 2007 to 2010, when home prices were falling rapidly, buying immediately was advantageous in 0% of scenarios. Still, purchasing immediately when ready dominated the overall results.

“After 30 years in the mortgage industry my advice to home buyers is not to wait if the deal makes sense to you,” said Max Slyusarchuk, CEO of AD Mortgage. "Trying to predict the market is not a guarantee as this study proves.”

Although mortgage rate is discussed as a major factor in timing to buy a home, waiting for rates to drop doesn’t always result in a better buying opportunity. 

From 2000 to 2002, the average 30-year fixed mortgage rate decreased from 8.05% to 6.54%. Despite the better financing rate, buying immediately in 2000 resulted in a better financial outcome in 34% of states compared to waiting until 2002. Changes in home prices, income and savings growth, and local markets are vital figures in addition to mortgage rates.

It’s important for buyers to focus on their own financial readiness to buy a home, rather than attempting to time a market that is famously unpredictable.

“People think things are always going to get better. They think if they hold off home prices are going to decrease, rates will drop, and no one else will be in the market for the same home they are looking for,” Nick Booth, a real estate agent in Salt Lake City, tells Realtor.com®.

However, falling mortgage rates can spur increased demand from buyers, increasing competition and driving home prices higher.

This was seen in the COVID-19 pandemic housing boom, when historically low mortgage rates brought hordes of new buyers to the market and, in turn, caused home prices to skyrocket. According to the Realtor.com analysis, home prices at the end of 2020 were roughly 7.6% higher than they were at the end of 2019.

“This is one of the biggest mistakes that buyer make. There are hundreds of thousands of people sitting on the bench right now waiting for interest rates to drop in order to buy. As soon as that happens, the market is flooded with buyers,” Booth says.

He recommends that buyers make their move when they can afford to, and refinance when mortgage rates drop. Loan rates can be adjusted in the future; the price you purchase your home for cannot.

“No one knows where things are going to go. The best time to buy is always 10 years ago. Instead of putting things off and waiting for the prices to increase, getting in now is the best option,” says Booth.