With interest rates paused, should you lock in a mortgage rate now?

While a cut to interest rates is still off in the distance, borrowers this week received the second-best news they could wish for: Rates aren't going to be increased again. At least not for November. While the benchmark interest rate range remains at a 22-year high of 5.25% to 5.50%, it will stay there at least until the final Federal Reserve meeting of 2023.

And though that rate remains high, even a pause can help borrowers now (and it can motivate savers to take advantage while rates are elevated). A pause, in particular, can be helpful for homebuyers who have been looking to purchase a new home. Even though mortgage rates today hover around 8%, it can still be a good time to lock in a rate, particularly if the prospect of a rate cut looks far off. In fact, there are multiple reasons why buyers may want to lock in a mortgage rate now while interest rates are paused.

Start by exploring your mortgage rate options here to see what you can qualify for.

Why homebuyers should lock in a mortgage rate with interest rates paused

Here are three compelling reasons why those looking to buy a new home should lock in a rate this month.

There's (slightly) more time to shop around

When interest rates increase, there's very little time between the Fed's actions and the corresponding bump in mortgage rates offered by banks and lending institutions. But after the Fed kept rates paused this week — and the next Fed meeting scheduled for December 12 and December 13 — borrowers have a little more breathing room to shop around to find the best rates and terms without the added pressure. 

They won't have an infinite amount of time, though, particularly if rates are increased in that final 2023 meeting. But they can lock one in now and still have the time to shop around for something better, which normally wouldn't be the case following yet another rate hike. 

Start exploring your mortgage rate options here today and see what you can find.

Rates will likely be lower

While not certain, the mortgage rates qualified borrowers can obtain now will likely be lower than what they can get if they wait for the Fed to make another rate hike. So, sure, 8% isn't considered a bargain now, particularly when compared to the sub-3% mortgage rates one could have secured in 2020 or 2021. But 8% is still likely to be lower than what you may encounter if you take a wait-and-see approach. 

Plus, by waiting, you could risk losing your dream home. After all, there's a reason why many experts recommend you "date the rate and marry the home." You can always refinance to a lower rate in the future, but the home of your dreams, in the location you want to live in, may not always be available.

You can explore your alternatives

Even with mortgage rates higher than they've been in decades, there are still ways borrowers can secure a below-average rate. A pause in rate hikes gives you more time to explore these methods. This includes shopping around (as mentioned above) but it also means getting rates for adjustable-rate mortgages (which can increase over time but may be lower than the median rate available now). 

There's also the potential to buy mortgage points, in which you pay a fee to the lender to get a lower rate now (think 8% without points and 7.50% to 7.75% with them). Or you could even see if the home you're interested in buying comes with an assumable mortgage. While rare in today's market, this option could save you significant sums of money if the current, assumable mortgage is pegged to a lower mortgage rate than you would have otherwise been eligible for.

Learn more about your mortgage rate options here.

The bottom line

Mortgage rates are high, no question. But timing here is crucial and there may be no better time, at least for the foreseeable future, than now to lock in a rate. This brief respite will give buyers some additional time to shop around but it will also, potentially, allow them to secure the lowest rate they can get until the economy fully recovers from inflation. Borrowers will also now have time to explore some other, lesser-known ways to obtain a below-average rate such as with an adjustable-rate mortgage, by buying mortgage points or by taking over an assumable mortgage. 

While the options (and the rates) may not be as favorable as they were just a few short years ago, any edge in the wider rate environment can help now. So don't dismiss the benefit of locking in a rate today. Get started here today!