Happy Monday!
My Friday update is arriving a little late this week—I was out of town and just got back. But with what's happened to mortgage rates, I didn't want to skip this conversation.
Every week I research the questions homeowners and buyers are asking Google and ChatGPT about home purchases, mortgages and the issues surrounding homeownership.
And this week's question is pretty obvious:
“Rates are back over 7%. Should I just stop looking?”
According to Freddie Mac, the national average 30-year fixed mortgage rate reached 7.03% last week, up from 6.76% just two weeks earlier. And it is currently approaching almost 7.5%,
There's no question about it: higher rates affect affordability and purchasing power.
But before your buyers get discouraged—or automatically decide they need to dramatically lower their price range—let's run the numbers.
The interest rate is only ONE part of the equation.
When I work with a buyer, I'm looking at the complete monthly obligation:
Principal + Interest + Property Taxes + Insurance + HOA + Other Monthly Debt
Then we look at the entire transaction to see what we can adjust.
Could a seller credit help with closing costs or an interest-rate buydown?
Would a 2-1 temporary buydown make the first couple of years more manageable?
Would paying points for a permanent rate reduction make sense—or not?
Could gift funds allow the buyer to make a larger down payment or preserve their cash?
Does one property have significantly lower taxes, HOA dues or insurance costs than another?
Could paying off a monthly consumer debt have a greater impact on qualifying than putting those same dollars toward a larger down payment?
And are there other loan programs that better fit this particular borrower?
One size does NOT fit all.
Karen's Desk
This is exactly when I don't want buyers—or Realtors—making assumptions based on a headline about mortgage rates.
Let's say your buyer was comfortable with their payment two weeks ago and rates have now moved higher.
Before telling them, “We need to lower your price range,” call me.
I'll rerun the scenario. Sometimes the answer WILL be that we need to adjust the purchase price.
But sometimes a different financing structure, seller concession, buydown, gift, debt payoff or simply a different property with lower taxes, insurance or HOA expenses can bring the total payment back into a comfortable range.
And sometimes the numbers tell us that the buyer really should wait.
That's okay too.
My job isn't to convince someone to buy a house. My job is to show them the numbers so they can make an informed decision.
Ask Karen
“My buyer was preapproved when rates were lower. Do we need to start over?”
Not necessarily—but we DO need to update the numbers.
A preapproval isn't something we should put in a drawer and forget about while rates are moving.
If your buyer is actively shopping, I want to keep evaluating their purchasing power as the market changes.
Before they write an offer, let's confirm:
The current interest rate and payment
Estimated property taxes
Homeowners insurance
HOA dues, if applicable
Cash required to close
Available reserves
Seller concessions we may be able to negotiate
And most importantly, whether the total monthly payment still works for the buyer
I'd much rather have that conversation before you write the offer than discover afterward that the payment is no longer comfortable.
Realtor Talking Point of the Week
When your buyer says:
“Rates are over 7%. Maybe I should just wait.”
Don't tell them rates are going to come down. None of us knows exactly what rates will do next.
Instead say:
“Before you give up, let's have Karen rerun the numbers based on today's rate and the house you're actually considering. Then you can make the decision based on facts rather than headlines.”
That's the conversation I want us having.
AI Prompt of the Week for Realtors
Copy and paste this into ChatGPT:
Act as an experienced Orange County Realtor communicating with a homebuyer who has become discouraged because mortgage rates have risen above 7%. Write a warm, educational and non-salesy email acknowledging that higher rates affect affordability, but explain that the interest rate is only one part of the total housing payment. Encourage the buyer to have their Realtor and mortgage professional review the complete transaction—including purchase price, down payment, seller concessions, possible rate buydowns, property taxes, insurance, HOA dues, other monthly debt and cash reserves—before deciding to stop their home search. Do not predict future mortgage rates or pressure the buyer to purchase. Keep the email under 250 words.
The Takeaway
Rates have changed. That doesn't automatically mean your buyer's goal has to change.
Maybe we restructure the financing.
Maybe you negotiate differently.
Maybe we look at a different price point.
Maybe we discover the buyer is still perfectly comfortable exactly where they are.
And yes—sometimes we determine that waiting really is the right answer.
But let's make that decision based on the actual numbers, not simply because your buyer heard that mortgage rates went over 7%.
If you have buyers who were preapproved before this latest rate move, send them back to me. Let's update their numbers before they give up on their home search.
Have a wonderful week!
Karen Card
The Card Team
Sr. Loan Officer | NMLS #235218
American Pacific Mortgage Corporation
Helping Veterans, Self-Employed Borrowers, First-Time Buyers, Seniors, Families in Transition and Homeowners Navigate Today's Mortgage Market.
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