While it's natural to hope for lower mortgage rates before buying a home, the reality is that market conditions can be unpredictable, and rates may not decrease as expected.

Instead of focusing solely on timing the market, it's more important to consider whether buying a home makes sense for you right now, based on your current financial situation and long-term goals.

Rates can be volatile: Mortgage rates saw historic lows in 2020 and 2021, with the 30-year fixed rate dipping to 2.65% in January 2021.

The dramatic drop was a direct result of the COVID-19 pandemic, which caused job losses and supply issues. To combat economic downturn, the Federal Reserve aggressively lowered the federal funds rate, making borrowing cheaper. Mortgage rates typically follow the Fed rate eventually.

As the economy began to recover, inflation surged, partially fueled by the low interest rates and other pandemic relief programs. To slow inflation, the Fed responded with a series of rate hikes in 2022 and 2023, which contributed to rising mortgage rates.

Rates can also hold steady: After surging near 8%, mortgage rates have settled in a range between 6% and 7% in 2025. Triggered by President Trump’s announcement of new tariffs in April, mortgage rates dropped to their lowest level in six months, then swiftly bounced back again.

In the “new normal” buyers may see slight rate reductions from time to time, but experts predict they will not dip significantly for the foreseeable future.

If inflation remains high, the Fed could continue to keep rates elevated. If the economy falters, rates could tumble. Other influencing factors include unemployment and the performance of the 10-year Treasury yield.

For prospective homebuyers, trying to wait for a significant drop in mortgage rates may not be the best strategy. The best time to buy is when it aligns with your financial situation and goals.

Homeownership should focus on the right home for your needs. Bay Equity’s home loan professionals are here to help. If mortgage rates do drop in the future, refinancing may become an option.