Home buyers bet on lower mortgage rates and lost
A Truework survey found more than 70% of recent buyers expected to refinance, but rates have stayed high and payments are squeezing budgets.
By Frankie Delgado · News Reporter
4 min read
More than 70% of people who bought homes in the past two years expected to refinance later, according to a Truework survey of 1,000 recent buyers cited by MarketWatch. For many, that cheaper loan has not arrived.
The wager was familiar across the housing market: buy the house while rates were uncomfortable, then refinance when borrowing costs cooled. But the average 30-year fixed mortgage rate has stayed above 6% for most of the past four years, according to Freddie Mac, after nearly reaching 8% in fall 2023, a level not seen since late 2000.
MarketWatch reported that some real-estate professionals had pushed the phrase “date the rate, marry the house,” telling buyers they could swap into a lower rate later. Others chose adjustable-rate mortgages, expecting rates to be lower by the time their loans reset.
That has left a painful gap between plans and reality. Truework found that half of recent buyers surveyed worried their mortgage could become “financially unsustainable” if they could not refinance soon. The survey also found that 85% said refinancing within three years was important to their financial health.
About 32% of recent buyers surveyed said they had already reduced spending on necessities such as food, clothing, healthcare and hygiene to keep up with mortgage payments, according to Truework.
Rates have not fallen far enough
Some experts had expected mortgage rates to fall below 6% in 2026, MarketWatch reported. That has happened only once this year, when the average 30-year fixed rate slipped to 5.98% shortly before the Iran war began in late February. As of last week, the rate was 6.49%.
MarketWatch pointed to several factors that have helped keep rates elevated, including Trump administration tariffs, the war in Iran and a jump in gas prices that drove Treasury yields higher.
For homeowners who already stretched to buy, refinancing is not a free escape hatch. Bankrate says refinancing typically costs 2% to 5% of the new loan amount, plus an origination fee and appraisal. MarketWatch reported that a common rule of thumb is that the new rate should be at least 75 basis points lower before refinancing makes sense.
Stefi Markowicz, a 28-year-old public-relations worker in Fort Lauderdale, Fla., told MarketWatch she and her husband bought their first home in October 2023 with a 7.49% mortgage rate and expected to refinance within months or the next year.
The couple paid $629,000 for a three-bedroom home, according to MarketWatch. Markowicz said they cut spending on nonessentials such as dining out and impulse purchases, while changes in their jobs later made the monthly payments more manageable.
Property taxes added another surprise. Markowicz told MarketWatch their taxes rose by $800 a month the year after they bought, then fell by $500 to $600 a month the following year. She said refinancing now would require them to stay in the home five to eight years for the break-even point to make sense, while they may want a larger home sooner.
Adjustable-rate loans are nearing resets
Intercontinental Exchange, a mortgage-data company, told MarketWatch that nearly 1 million U.S. homeowners used adjustable-rate mortgages to buy homes from 2022 through 2024 and still have those loans. Of that group, 133,000 have entered the adjustable period.
ICE said about 6,000 ARM borrowers are expected to hit their first reset in the second half of this year, with another 81,000 reaching that point next year. The company said ARM borrowers tend to have higher incomes and buy more expensive homes in pricier markets.
ICE data showed the average remaining balance on ARM loans originated from 2022 to 2024 was $658,000, compared with $318,000 for fixed-rate loans originated during the same period.
Some borrowers are still using ARMs to cut costs. Sawyer Sams, a financial adviser in Johnson City, Tenn., told MarketWatch he saved about $300 a month by refinancing from a 30-year fixed mortgage at 6.25% to an ARM with an initial rate around 5.25%.
Sams and his fiancée bought their three-bedroom home for $462,000 in summer 2024 and expect to stay about five years, according to MarketWatch. He said the ARM matched that timeline and could give them options if rates fall or they decide to move.
This story draws on original reporting from MarketWatch.