Baker Realty

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Congratulations to our clients for getting their home under contract in a tough market! The fortunate buyers are getting an amazing home with amazing views!

Buyers May Need to Get Used to Mortgage Rates Around 7%

For homebuyers waiting for mortgage rates to fall significantly before making a move, today’s Federal Reserve decision sends an important message: mortgage rates around 7% may be something buyers need to plan around for the foreseeable future.

The Federal Reserve raised its benchmark interest rate today by a quarter of a percentage point, bringing the federal funds target range to 3.75% to 4.00%. It was the Fed’s first rate increase since 2023 and reflects continuing concern about inflation. Perhaps more importantly, the Fed’s latest projections suggest today’s increase may not be the last. Sixteen of 18 policymakers expect at least one additional quarter-point increase by the end of this year, with the median projected federal funds rate reaching 4.00% to 4.25%.
For the housing market, however, the Fed’s rate is only part of the story.

The Federal Reserve does not directly set mortgage rates. Thirty-year mortgage rates are much more closely influenced by longer-term Treasury yields, inflation expectations and investors’ expectations about where the economy is headed. The 10-year Treasury yield recently reached 5.041%—its highest level since 2007—and mortgage rates have climbed along with it.

As of September 16, the average 30-year fixed conventional mortgage was approximately 7.08%, roughly three-tenths of a percentage point higher than just one week earlier.
For buyers who have been waiting for rates to return to 3%, 4% or even 5%, the latest developments may require a change in expectations. With the Fed now raising rates rather than cutting them—and signaling that additional increases could be coming—waiting for dramatically lower mortgage rates could mean waiting much longer than anticipated.

Higher rates have a very real effect on affordability. As borrowing costs increase, the same monthly payment buys less house. Some buyers lower their price range, while others leave the market temporarily. First-time buyers can be especially affected because they generally do not have equity from the sale of another property to help offset the higher cost of financing. Higher rates also tend to reduce buyer competition, increase days on market and put more pressure on sellers to price homes competitively.

We are already seeing signs of that adjustment. U.S. homebuilder confidence fell to a one-year low in September, and previously owned home sales recently dropped to a 14-month low. Thirty-eight percent of builders reported cutting prices, while 66% are using sales incentives to attract buyers.

That doesn’t necessarily mean a housing crash. Instead, higher borrowing costs can create a slower, more balanced market where buyers have more time to make decisions and potentially more negotiating power. Sellers may need to become more realistic about pricing, condition, repairs, closing costs and other concessions.

For buyers who can comfortably afford a home at today’s rates, that reduced competition can create opportunities that were difficult to find when rates were extremely low and bidding wars were common.

Perhaps the biggest adjustment, however, is psychological.
The extraordinarily low mortgage rates buyers experienced several years ago were unusual. Instead of asking, “When will rates get back to where they were?”, buyers may need to start asking, “Can I comfortably afford the right home at today’s rate?”

If mortgage rates eventually decline, refinancing may provide some homeowners an opportunity to lower their payments later. But buyers should be careful about purchasing a home they cannot comfortably afford today based solely on the assumption that refinancing will be available in the future.

Today’s Fed decision makes one thing increasingly clear: 7% mortgage rates may not simply be a short-term obstacle that buyers can wait out. They may be part of the housing market buyers and sellers have to learn to navigate.

Congrats to our clients in Leander who were able to get under contract in less than a week. Good pricing strategy paired with a highly maintained home will get you to closing!

Congrats to our clients for selling in Elgin. We had to compete with the new builders and we found a way!!

Just Listed!!
213 Inca Dove Ln Leander, TX
$359,990
MLS: 6599756

Beautifully updated 3-bedroom, 2.5-bath home in Summerlyn with a flexible floorplan, distinctive upgrades & an exceptional backyard.

The light-filled main living area features engineered wood floors, recessed lighting, and multiple windows to the landscaped backyard. The updated kitchen features stainless steel appliances, white cabinetry, custom pantry shelving, convection oven, new dishwasher & new countertops & flooring completed in 2026. A sound-dampened bonus room/office is ideal for musicians, podcasters, gamers or working from home.

Upstairs, an oversized movie room provides amazing additional living space with a projector & space for a 150-inch screen. The spacious primary suite includes a private balcony—perfect for morning coffee—updated bath with dual vanities, new flooring, updated lighting & mirrors, separately enclosed water closet & an expansive custom walk-in closet. You will also find two guest bedrooms and a full guest bathroom.

The beautifully landscaped backyard is designed for outdoor living & entertaining, with extensive stone patios, multiple gathering areas, a covered patio, gas fire pit with built-in stone seating, mature trees, manicured lawn, colorful garden beds, herb garden, string lighting & storage shed. The shaded patio creates a great spot for late-afternoon & evening entertaining, while refreshed 2026 landscaping adds to the home's curb appeal & outdoor charm. Solar panels installed in 2016 with a 25-year warranty help reduce electricity costs, with the seller reporting an average electric bill of approximately $15/month over the past year. Additional improvements include a 2021 roof, fresh interior paint, updated ceiling fans, remodeled downstairs half bath & finished garage with added outlets & overhead storage. Summerlyn amenities include a pool, parks, walking trails, splash pad & basketball court, with convenient access to the San Gabriel River, restaurants, coffee shops, Costco, Target & 183 Toll. Leander ISD.

Congrats to our clients on a smooth transaction! We are sad to see you leave the area but also excited for your future plans!!

There are some great opportunities out there for buyers and sellers to make a deal! If you're thinking about purchasing a 2nd home, let us help you find your dream place!