What if mortgage interest rates don't fall? 3 advantages to still buying now

After a respite in June, the Federal Reserve raised interest rates again in July, moving the benchmark rate to a range between 5.25% and 5.50%. That's the highest level in 22 years. While that may be beneficial for those with high-yield savings and certificates of deposit (CD) accounts, higher interest rates generally hurt a wide swath of borrowers. 

This is arguably felt the most by homeowners looking to refinance and buyers looking to purchase a home. As of August 7, 2023, the average 30-year mortgage interest rate is 7.09%, while a 15-year mortgage is 6.54%. Compared to the very low rates buyers and owners could have secured during the height of the pandemic, now doesn't seem like a great time to buy or refinance. 

But everyone's personal financial situation is different and even if rates don't fall, it doesn't necessarily mean that now isn't a good time to move. In fact, depending on where you live and your financial goals, there may still be advantages to buying a home now.

Start by exploring your mortgage rate options here to see exactly what rate you'd qualify for.

3 advantages to homebuying now

While no one wants to pay more than they should, there may still be some advantages to buying a home now. Here are three to consider:

Buy high, sell high

Interest rate hikes have had mixed results on the larger real estate market. In some portions of the country, home values have dipped, but in others, they've remained the same or have actually increased. If you have a home in one of the latter regions, it may make sense to still buy a new home now because you'll have a chance to make more money on your existing property than at any time previously. 

So while you may pay more for a property you like than you would have previously, you'll also likely earn a greater profit on your current home sale than if you had put it on the market earlier. That greater profit will put you in a position to bid on more expensive homes than you may have anticipated.

It's not an exact science, and it's particular to where you currently live — and where you want to move to — but if you can sell your home for a higher price, it may still be worth buying now, even at the elevated interest rates.

Learn more about your mortgage options here now.

Tax benefits

If you don't own a home yet, then you're not benefiting from a significant tax advantage that many homeowners enjoy. The mortgage interest tax deduction specifically puts a lot of money back into the pockets of homeowners every tax filing season. This allows you to deduct a significant amount of money from your tax bill — resulting in thousands of dollars back to you on your annual return. But you need to own a home and pay a mortgage to file for the deduction.

While this may not be a strong enough incentive to buy a home, it could help alleviate some of the burden of paying that elevated interest rate. Crunch the numbers and see if it's worth it for you. When comparing the cost of the higher rate to what you could get back at the end of the year, you may be pleasantly surprised.

Investment value

Yes, rates are high now. And yes, that may affect how much you can borrow and what you can ultimately purchase. But a real estate purchase, over the long-term, is still generally the better option, particularly when compared to renting. That's because real estate values, accounting for some inevitable hiccups, will continue to rise. Even adjusted for inflation, home values today are still significantly higher than what they were in decades past, making real estate one of the best long-term financial investments Americans can pursue.  

And remember

Interest rates are always changing. Most experts expect rates to stay flat or even drop later this year and into 2024. As the fight to tame inflation improves interest, rate improvements will likely follow. And, as many have already said, buyers should simply consider "dating the rate and marrying the home." In other words: rates are temporary and can and will change. But if you find your dream home now, you may not get a second chance to buy it in a more favorable rate environment.

Learn more about today's mortgage interest rates here now.