Are Interest Rates Really That High?

One of the things I hear most from people in the current state of the economy is “I will just wait for interest rates to drop”. I totally understand that the mindset you have when you’re used to seeing 2–3% interest rates all over social media, makes today’s 6–7% sounds crazy. But here’s the truth: those super low rates weren’t normal. They were a reaction to some pretty serious economic issues.

Why Rates Were So Low

After the 2008 financial crash, the housing market collapsed. To stabilize the economy, the Fed dropped interest rates dramatically and kept them low for years. Then when COVID hit, rates dropped even lower—some buyers were locking in at 2.5% or below.

But here’s the catch:
Those rates weren’t healthy. They were emergency measures to keep money moving during periods of instability.

Now that the economy is more stable (even if still uncertain), the Fed has increased rates to cool inflation and prevent the economy from overheating.

What’s Going On With Rates Now?

Fast forward to now, and while things still feel unpredictable in some areas, the economy is generally more stable. Inflation has been a concern, and to fight it, the Fed has been raising interest rates. That’s why today’s mortgage rates are sitting around 6–7%, which, believe it or not, is actually closer to historical averages than most people think.

So if you’re sitting on the sidelines waiting for 2% or 3% rates to come back, here’s the reality: you’re basically waiting for another major economic meltdown. And let’s be real… nobody wants that. Hoping for a crash just to lock in a cheaper mortgage isn’t a great long-term plan for you or the overall market.

What Buyers Should Focus On Instead

If the monthly payment works for your budget, and the home fits your lifestyle and goals, the interest rate shouldn’t be the dealbreaker. You can always refinance down the road if rates drop again in a healthier economy. But waiting around, trying to time the market perfectly, often just leads to missed opportunities. Meanwhile, home values continue to grow over time. With each rent check you write, you’re not building any equity.

Overall, I understand why these rates can seem outrageous after getting so used to those 2-3% rates for so long, but rates being that low are a reflection of economic instability and panic induced fix’s, If you’re curious as to what numbers could work for you and how much buying power you have in this current economy, please reach out and we can work together to find something that works for you and sets you up to start your future today.

This would usually be my spot for the sports section for the week…but sports has been pretty slow in terms of offseason news and games being played. The Kings rookies are showing a ton of upside during summer league and the 49ers season is right around the corner, so I will have tons of new exciting sports to talk about really soon here, just hang in tight for the meantime.