Interest Rate Cuts Are Lagging, But Mortgage Lending Is Booming. Should You Buy Now?

With interest rates still moving around 6.8percent , many potential homebuyers are wondering if this is the right time to buy a home or if they need to hold a mimic to lower potential interest rates later this year. 

While interest rates have not yet fallen, the mortgage market is seeing renewed activity, and experts say buyers may adjust their expectations and move forward with their home purchase anyway. 

Should I buy now or wait?  Let’s take a look at what’s happening in the mortgage market, according to a recent study at TransUnion, along with factors driving demand and what financial experts say about the timing of your home purchase. 

Credit loans are increasing – why? 

Mortgage market sees a new wave of activity, but not because interest rates have fallen, according to Charlie Wise, senior vice president and head of global research at TransUnion.  Instead, “Consumers have readjusted their outlook on expectations, realizing they’re not going to see immediate interest-rate relief in the near term,” he said. 

In the past two years, many potential buyers have waited on the side until mortgage rates have fallen below 6%. But without immediate relief on the horizon, Wise explained that buyers had accepted that prices were not expected to drop much lower and were moving forward with home purchases based on their needs. 

Why are some home buyers locked up at today’s rates 

Although mortgage rates remain high, some buyers are planning to purchase now with the expectation that they will be able to refinance later if interest rates go down.  Many homeowners who have raised mortgages of over 7  % since 2022 are actively watching interest rate reductions, Wise said. 

“I can assure you that almost every one of these people will love the opportunity to recycle up to 6 %,” Wise said. “You’re talking about saving hundreds of dollars a month — that can go to building savings, debt repayment, or other financial goals.” 

This potential for future refinancing makes higher rates feel more acceptable, as long as buyers are willing to deal with their mortgage payments in the short term, he noted. 

Melanie Mawson, a financial expert in Clearsurance.com, agreed that this mindset was pushing some buyers into the market despite higher rates. 

She explained that house prices could go up if interest rates went down.  By purchasing now, buyers may ensure a lower price instead of competing with more buyers later if rates fall. 

“If you can recycle for low interest, you can buy a house before the value goes up, while enjoying good interest,” Mawson said. 

Credit scores are more important than ever 

While many buyers may be focused on interest rates, Wise emphasized attention to your credit rating, which plays a big part in ensuring a lucrative mortgage. 

“More than any other type of credit product, the interest you pay really determines what your monthly payment will be,” Wise said. “If you have opportunities to improve your credit rating in the near term, it can really help reduce the amount you need to pay each month.” 

Simple steps like paying credit card balances, consolidating high-interest debt, and checking errors in your credit report can increase your credit score by  20 to 50 points, he explained.  This can lead to a lower interest rate of mortgage and significant monthly savings. 

One big warning: Student loan payments may affect your mortgage prospects 

With ongoing confusion surrounding student loans and forgiveness programs, Wise reminded consumers that missed student loan payments could hurt potential buyers preparing to apply for a mortgage. 

“Since the first of October last year, student loans have actually been in a long period of tolerance,” Wise said. “As of October, the clock has started ticking, and credit bureaus are now reporting student loans on time or late arrival.” 

Three or more missed payments will appear in consumer credit reports – which could significantly affect mortgage entitlement. 

“If these attacks start appearing in your credit reports, it will really hurt your credit score,” Wise warned. “And you’re likely to get a mortgage at a good rate, or even at all, will be affected.” 

If you have student loans and are considering buying a home, Wise recommended checking the status of your loan immediately and ensuring that you make payments on time. 

Should I buy now or wait? 

Ultimately, the decision to buy a home depends on your personal financial situation, budget, and long-term goals. 

Mawson advised potential buyers to start looking now, even if they were not prepared to make an offer immediately. 

“Don’t wait,” she said. “You don’t have to buy now, but if you’re looking, you’re more likely to find a home that meets your needs at an affordable price.” 

If you are financially ready, have a good credit rating and have found a home that fits your budget, buying now can help you lock down a lower price and recycle when rates improve.