On Wednesday, new Fed Chair Kevin Warsh announced the first interest rate hike since 2023. That same day, the average 30 year mortgage hit 7.24%, the highest it has been all year.

If your first thought was "well, there goes buying a house," I get it. But I spent this week running numbers for clients, and I came away more encouraged than I expected. Today we're covering what has actually caused mortgage rates to climb, what it changes for you, and the strategies I'm using with buyers and sellers right now to win in this market.

Here is the thing most headlines don’t explain. The Fed doesn't set mortgage rates. Mortgage rates follow the 10 year Treasury, which is sitting right around 5%, the highest since 2007. That has been climbing for months because of inflation, government spending, and oil prices.

Mortgage rates went from 5.99% in February of this year to over 7% before the Fed officially increased what’s called the “Fed Funds Rate.” And now several days after the hike, rates have actually slipped back to 7.2%.

Why? When the Fed signals they are serious about inflation, investors relax a little. Zillow's chief economist said this week that the hike makes lower mortgage rates more likely in 2027, not less.

If you own a home with a fixed rate, nothing changes. Your payment is locked, and your low rate is one of the best financial assets you have.

If you have a HELOC or credit card balances, those rates will go up.

If you're buying or selling, things haven’t really changed much since last week. But the opportunities from here might.

You get to choose your price once. But you can always change the mortgage rate later.

Take a $550,000 home in Utah County with 10% down. At today's 7.2%, principal and interest runs about $3,360 a month. If rates come back to 6.25% and you refinance, that drops to about $3,048. That's roughly $300 a month back in your pocket, and lenders I work with will even waive the closing costs on that future refinance.

In a world where home prices are expected to continue going up slowly, this would lock in your price now and begin that clock of building equity and paying down your mortgage.

That being said, I won't pretend anyone knows when mortgage rates will drop. So here is the rule I give every client: buy a payment you can live with today. If a refinance comes, it's a bonus that you can either use to build more savings, invest, or perhaps upgrade to a nicer home when that time comes. But what you can't get back later is today’s price. Right now there are fewer buyers out looking, sellers are negotiating, and you can often get a much lower rate than what's advertised. I showed exactly how buyers are landing rates in the 4-6% range two weeks ago.

Buyers paying a 7% mortgage shop by monthly payment, not by price. The homes selling right now are priced for that buyer and offer help with buying down the mortgage rate. The good news is that helping with the rate usually costs you less than a price cut, and the buyers looking at homes in the fall are typically more serious buyers.

The headline sounds scary, but the plan is simple. If you’re buying, get a great price now with a payment you can afford and keep the door open on the rate. If you’re selling, price based off today’s market with today’s mortgage rates. If you own your home and you are staying put, enjoy that low fixed rate!

Want me to run your numbers? Just reply with one word: BUYING, SELLING, or STAYING. I'll reply and create a plan for your exact situation, no charge and no pressure.

Here to serve,

P.S. Know someone who gave up on buying this year? Forward this to them. They probably have more options than they think.