Mortgage rates just hit 7.28%. But there are ways to get a lower rate

Higher Mortgage Rates Are Raising the Stakes for Home Buyers

Activelifezero.com – Home shoppers are confronting a sharper increase in borrowing costs after the average rate on a 30-year fixed mortgage climbed to 7.28% this week. Freddie Mac released the figure Thursday, following a 7.03% reading the previous week.

The move extends a six-week rise in mortgage rates and represents the largest weekly increase in almost four years. Rates are now at their highest point since November 2023, adding pressure to buyers whose purchasing power has already been constrained by expensive home prices.

Bond-market volatility has been a key force behind the increase. The yield on the 10-year Treasury has climbed in recent months as investors weigh concerns that the Iran war and heavier government spending could keep inflation elevated and lead the Federal Reserve to maintain higher interest rates for longer.

For buyers who still need financing, a higher rate can translate into substantially larger monthly payments than they might have faced only months ago. On the other hand, the rise may reduce competition from buyers who are especially sensitive to interest-rate changes. That could create more room to negotiate in some local markets.

Looking Beyond the Standard 30-Year Loan

The 30-year fixed-rate mortgage remains the most common choice because it spreads payments over a long period and locks in a predictable interest rate. Yet it is not the only financing path available, and some alternatives can begin with lower rates.

A 15-year fixed mortgage often carries a lower interest rate than a 30-year loan. The trade-off is a much higher monthly payment, since the balance must be repaid in half the time. Buyers considering this structure need to make sure the larger payment leaves enough room in their budget for maintenance, insurance, taxes and other household costs.

Adjustable-rate mortgages, or ARMs, have also attracted increased attention. In the latest data from last week, ARM loans carried rates roughly 80 basis points below fixed-rate loans and made up 10.3% of mortgage applications, their biggest share since October 2025, Mortgage Bankers Association deputy chief economist Joel Kan said.

An ARM normally offers an initial fixed rate for five, seven or 10 years. Once that period ends, the rate can reset in line with market conditions. That feature can be useful for someone with a realistic plan to sell the home or refinance before the reset date, but it also creates uncertainty if rates remain high or rise further.

“It may work well for some borrowers who are expecting to move or refinance in four or five years,” said Jeremy Luke, a divisional director at Chase Home Lending. “It may not work for all.”

The risks deserve careful consideration. Adjustable-rate products contributed to housing-market vulnerability before the 2008 financial crisis, particularly when borrowers faced payment jumps they could not absorb. Today’s loans and underwriting standards differ in important ways, but buyers should still understand how high their payment could become after the introductory period expires.

Assumable Mortgages Can Offer Another Route

In some transactions, a buyer may be able to take over the seller’s existing mortgage rather than apply for a completely new loan. This is known as an assumable mortgage, and it can be especially appealing when the seller’s loan has a rate well below current market levels.

Many government-backed mortgages can be assumed, including loans backed by the Federal Housing Administration, the Department of Veterans Affairs and the Department of Agriculture. Not every mortgage is eligible, however, and the approval process can take longer than a typical purchase loan.

There is also a significant financial hurdle to consider. The buyer assumes only the balance still owed by the seller. If the home’s price is far above that remaining balance, the buyer must cover the difference with cash, a second loan or another source of financing. A favorable interest rate does not eliminate the need to evaluate the full amount needed to close.

Improving the Rate You Are Offered

Market averages do not determine every borrower’s final rate. Lenders also assess credit scores, debt-to-income ratios and the size of the down payment, said Jeff DerGurahian, head economist at loanDepot. Comparing offers from multiple lenders can help buyers see how those factors affect their available terms.

Borrowers dissatisfied with quoted rates may also have the option of paying more at closing to reduce their interest rate. A permanent buydown lowers the rate for the full life of the mortgage. A temporary buydown costs less upfront but cuts the rate only during the first few years of the loan.

“You don’t want to put so much money down that you can’t do what you need to do to live in your house and live day-to-day,” DerGurahian said.

That caution applies to both discount points and a larger down payment. Keeping reserves for moving expenses, repairs, emergencies and ordinary living costs can be as important as securing a lower advertised rate.

Negotiating With Sellers and Builders

Buyers may not need to fund every rate-reduction option themselves. A seller or homebuilder can sometimes pay for a buydown as part of the purchase agreement. Builders have increasingly relied on incentives to draw buyers to newly constructed homes, including rate buydowns and credits toward closing costs.

In September, 66% of builders said they were using sales incentives, compared with 63% in August. That was the highest share since December in the National Association of Home Builders’ sentiment survey.

Local market conditions can shape how much leverage a buyer has when requesting those concessions. In a buyer’s market, housing supply exceeds demand, giving purchasers more opportunity to seek a price reduction, closing-cost assistance or financing incentives. In a tighter market, sellers may be less willing to make such adjustments.

With mortgage rates moving quickly, buyers benefit from looking beyond a single headline number. The right choice depends on how long they expect to own the home, how much cash they can safely use at closing, their tolerance for payment changes and the negotiating conditions in their area.