If you’ve been waiting for mortgage rates to come down before buying a home, there’s an important new message coming from one of the housing industry’s leading economists:
It may be time to stop assuming significantly lower mortgage rates are right around the corner.
Lawrence Yun, Chief Economist for the National Association of REALTORS®, recently addressed the rise in mortgage rates and concluded:
“Expect 7% as the new normal.”
That statement is getting attention — and understandably so.
But does it mean mortgage rates will stay at 7% forever? Does it mean Rhode Island home buyers should rush out and buy a house before rates go even higher?
No.
What it does mean is that buyers may need to rethink the strategy of putting their housing plans on hold while waiting for interest rates to return to the unusually low levels we experienced several years ago.
Mortgage Rates Are Back Around 7%
According to Freddie Mac, the average 30-year fixed mortgage rate was 6.95% as of September 17, 2026, compared with 6.76% the previous week and 6.26% one year earlier.
That puts mortgage rates essentially back at the 7% level.
Yun pointed to several economic forces contributing to higher borrowing costs, including inflation pressures, oil prices and concerns surrounding federal borrowing.
However, his comments came with an important qualification.
Rates could come down if inflation improves, oil prices retreat, the federal budget outlook improves or productivity gains help reduce inflationary pressure.
In other words, “7% is the new normal” does not mean mortgage rates can never decline.
It means nobody can confidently tell you when they will.
Stop Trying to Predict Mortgage Rates
This is where I think the conversation with home buyers needs to change.
For the last several years, I’ve heard some version of this over and over:
“I’m going to wait until mortgage rates come down.”
I understand the thinking. A lower interest rate can substantially reduce a monthly mortgage payment and increase purchasing power.
But waiting for a specific interest rate means making one of the biggest financial and lifestyle decisions of your life based on something none of us can reliably predict.
Instead, I believe buyers should start with a different question:
Does buying a home make sense for me at today’s price and today’s payment?
That is a question we can actually answer.
What Does a 7% Mortgage Mean for Your Payment?
Interest rates matter.
For example, Freddie Mac illustrates the approximate principal-and-interest payment on a $300,000, 30-year mortgage this way:
- At 6.5%: approximately $1,896 per month
- At 7.0%: approximately $1,996 per month
- At 7.5%: approximately $2,098 per month
- At 8.0%: approximately $2,201 per month
Those figures are principal and interest only. Property taxes, homeowners insurance, mortgage insurance when applicable, condominium fees and other housing expenses also need to be considered.
That’s why I would never tell a buyer that the interest rate “doesn’t matter.”
It absolutely does.
The question is whether the complete monthly housing expense fits comfortably within your financial situation.
Should You Buy a Home in Rhode Island With a 7% Mortgage Rate?
There isn’t one answer that applies to everyone.
For one buyer, purchasing today could make sense.
For another, waiting six months may be the better decision.
And someone else may need to spend the next year improving credit, reducing debt, increasing savings or adjusting the price range they are considering.
That is why I don’t believe the decision should simply be:
“Buy now.”
or
“Wait until rates come down.”
Instead, we should look at your individual circumstances.
How long do you expect to live in the home?
What would the total monthly payment be?
How does that compare with your current housing expense?
How much cash will you have left after closing?
Do you have reserves for unexpected expenses?
What other financial obligations do you have?
And perhaps most importantly:
Would you still feel comfortable with the decision if mortgage rates did not come down anytime soon?
If the answer is yes, then it may be worth exploring what you can buy today.
If the numbers don’t work, that’s valuable information too. We can build a plan rather than forcing a purchase that doesn’t make financial sense.
What If Mortgage Rates Come Down After You Buy?
This is another question I hear frequently.
Depending upon the circumstances, homeowners may have an opportunity to refinance their mortgage if interest rates decline enough in the future.
But I don’t recommend purchasing a home because you’re counting on refinancing later.
There are costs associated with refinancing, qualification requirements can change, property values can change and nobody knows where future mortgage rates will be.
I prefer looking at a possible future refinance as an opportunity — not as something your home purchase depends upon.
Buy the house based on whether the numbers work today.
If rates eventually fall and refinancing makes financial sense, that’s a conversation to have at that time.
Higher Rates May Change How You Shop for a Home
If mortgage rates remain near 7%, buyers may need to approach the Rhode Island housing market differently.
Instead of focusing only on the maximum purchase price a lender approves, focus on the monthly payment you are comfortable living with.
That might mean adjusting the price range.
It might mean looking at a different community.
It could mean comparing different loan programs, down-payment options or potential assistance programs with a qualified mortgage professional.
And it makes shopping mortgage options particularly important. Your credit profile, down payment, loan program and lender can all affect the rate and terms you are offered.
The goal isn’t simply to qualify for the largest mortgage possible.
The goal is to purchase a home you can comfortably afford and still enjoy living your life.
The “New Normal” May Actually Require an Old-Fashioned Approach
For many years, historically low mortgage rates allowed buyers to focus heavily on purchase price.
A higher-rate environment makes the fundamentals much more important.
Budget.
Monthly payment.
Emergency savings.
Credit.
Debt.
Length of ownership.
Condition of the property.
And whether the home actually meets your needs.
That may not generate the most exciting real estate headline, but it can lead to much better decisions.
Don’t Put Your Life on Hold Trying to Predict the Market
Nobody knows exactly where mortgage rates will be six months or a year from now.
They could be lower.
They could be higher.
They could remain around 7%.
What we can determine is whether buying a home makes sense for you under today’s conditions.
If you’ve been sitting on the sidelines waiting for mortgage rates to come down, perhaps the next step isn’t immediately buying a house.
Maybe it’s simply running the numbers again.
Find out what you qualify for.
Determine what monthly payment you’re genuinely comfortable with.
Look at what homes are available in that price range.
Then make an informed decision based on your life and your finances — rather than trying to predict where mortgage rates are going next.
Thinking About Buying a Home in Rhode Island?
If you’re trying to decide whether buying now, waiting or adjusting your price range makes the most sense, I’m happy to help you work through the real estate side of the equation and connect you with qualified mortgage professionals who can explain your financing options.
The answer isn’t the same for everyone — and it shouldn’t be.
Joe Luca, REALTOR®
Serving Rhode Island and nearby Massachusetts
Real estate guidance for buyers, sellers and homeowners in transition.
Joe is a Licensed REALTOR, providing Residential Real Estate Services in Massachusetts and Rhode Island and Income Property Advisory Services nationwide.
Joe is 2018 President of the Rhode Island Association of REALTORS. Member, Board of Directors, National Association of REALTORS®.
Joe has worked with many 501(c)3 corporations as a Broker and volunteering his time, skills, and services.
