Mortgage Rates Are Above 7% (7.4% APR). So Why Might This Be a Good Time to Buy?

Introduction

Rates are up, buyers are frustrated, and some people have paused their home search. Yet in the same month rates crossed 7% (7.4% APR), buyers in the Greater Seattle area gained something they have not had in more than a decade: choices. Inventory is at a 12 year high, and that changes the negotiation.

This article explains how higher mortgage rates affect affordability alongside changes in the housing market.

Quick answer: Yes, for some buyers. A higher rate could mean substantially more in additional monthly costs, depending on the mortgage amount and the rates compared. However, inventory is at a 12 year high, which gives buyers more choices and more room to negotiate credits and rate buydowns. The right answer depends on how long you plan to stay and whether the payment fits comfortably.

If we haven’t met, I’m Cheryl Dillon, a residential Realtor serving Greater Seattle, the Eastside, and Snohomish County. I enjoy helping people make confident decisions about their homes and lifestyles. Whether you’re thinking about buying or selling, or simply exploring your options, I’d love to connect and help you consider what might be right for your next move.

What Happened: The Fed's First Rate Hike Since 2023

On September 16, 2026, the Federal Reserve raised its benchmark federal funds rate by a quarter of a percentage point, to a target range of 3.75 to 4.00%. It was the first increase in more than three years, and it followed inflation that had climbed to 3.4% over the 12 months ending in July.

The Fed does not set mortgage rates directly. Mortgage rates tend to follow longer term bond yields, especially the 10 year Treasury, and those yields had already been rising. The Fed's decision confirmed what the bond market was signaling.

According to Freddie Mac, historical national averages for 30 year fixed mortgage interest rates were as follows. These are national survey statistics, not available loan offers. Freddie Mac does not report corresponding APRs:

• September 17, 2026: 6.95% 
• September 24, 2026: 7.03% , the first time above 7% since January 2025
• October 1, 2026: 7.28%
• October 8, 2026: 7.40%, compared with 6.30% a year earlier

For perspective, Freddie Mac's reported the national average 30 year fixed mortgage interest rate was 5.98% on February 26, 2026, its lowest point since September 2022. By October 8, it had increased by more than a full percentage point. These are historical interest rate averages; 

How Can Higher Mortgage Rates Affect Affordability?

Even a modest rate increase can make a meaningful difference in affordability. The exact impact depends on the loan amount and terms. Property taxes, insurance and any HOA dues also affect monthly costs.

King County Example

King County's median sales price for homes and condos combined was $850,000 in September, according to the Northwest Multiple Listing Service (NWMLS). With 20% down, the loan is about $680,000 for principle and interest only.

• On a loan of this size, a higher rate could be substantially more per month compared with a lower-rate period.
• A licensed lender can provide comparisons using actual loan terms.
• The full cost of ownership also includes property taxes, insurance, and any HOA dues.

This is why it helps to compare the full housing budget rather than the interest rate alone.

What Is the Other Half of the Story?

The September report from NWMLS, released October 6, showed active listings across its service area rose 24.5% from a year earlier to 24,965 homes, the most choices buyers have had since September 2014.

• Pending sales fell 15.1% from a year earlier, the sharpest drop of 2026
• Months of inventory reached 4.44, the highest level since February 2014
• For every 100 new listings, buyers went under contract on about 62 homes, compared with about 80 a year earlier
• King County's median price held steady at $850,000, with 4.70 months of inventory
• Snohomish County inventory rose 44.2%, with 3.85 months of inventory

In plain language, prices are holding fairly steady while buyers gain more choices and more negotiating room.

Will Home Prices Drop Because of Higher Rates?

Nobody can promise you where prices will go. Here is what the data and my experience suggest.

Prices tend to be sticky. Many local homeowners have low rates and strong equity. They are not forced to sell, so they often hold firm or take the home off the market rather than accept a deep discount.

Leverage shows up in terms before it shows up in price. Buyers often gain through seller credits, rate buydowns, repair concessions, and flexible timelines rather than dramatic price drops.

Conditions vary by price point. A well priced, move in ready home can still draw competition, while condos and higher priced homes show the most room to negotiate. NWMLS reported condos at 6.29 months of inventory regionwide in September, compared with 4.20 months for single family homes.

What Should Buyers Do Right Now?

1. Run your numbers at today's rate. Get a fresh preapproval based on current rates, not the rate quoted in August. A payment you are comfortable with today is the foundation for every other decision.
2. Use your leverage. With more homes to choose from and fewer buyers competing, many sellers are open to credits that can fund a rate buydown or cover closing costs. A seller funded buydown can lower your payment, either permanently or for the first year or two.
3. Look at assumable loans. Some homes come with an FHA, VA, or USDA loan that a qualified buyer may be able to take over, often at a far lower rate than today's market. I cover this in my guide to assumable mortgages.
4. Date the rate, marry the house. You may be able to refinance later if rates improve, though that is never guaranteed and refinancing has costs. The home, its location, and the price you negotiate today are much harder to change.
5. Be honest about your timeline. If you plan to stay at least five to seven years, short term rate movements matter less than finding the right home at the right price. If you may move again soon, a different loan structure or waiting could make more sense.

What Should Sellers Do Right Now?

Higher rates make buyers more payment sensitive, and that changes how a smart seller prepares.

• Price for today's buyer. Pricing from last spring's comparable sales is the most common mistake I see right now. A buyer who qualified for $900,000 in February may qualify for less today.
• Offer terms that speak to payments. A seller credit toward a buyer's rate buydown can be more attractive than an equal price reduction, because it lowers the monthly payment directly.
• Check whether your loan is assumable. If you have an FHA, VA, or USDA loan with a low rate, that rate may be one of your home's most valuable features.
• Prepare and present well. Buyers averaged about 4 showings per listing in September, down from more than 5 a year earlier, so every showing counts. Thoughtful repairs, professional photography, and a strong online presence matter more than ever.

Should You Wait for Rates to Come Back Down?

Waiting can make sense for some people, and I will always tell you honestly if I think waiting serves you better. Here are three things to weigh.

• Nobody knows when rates will fall. Forecasts shift with every inflation report.
• Lower rates can bring more buyers back. If rates fall meaningfully, competition often returns, and today's negotiating leverage can shrink quickly.
• Life does not wait for the perfect rate. A growing family, a new job, or a desire to be closer to loved ones are all good reasons to move.

The best decision fits your life, your budget, and your timeline, rather than a market no one can predict.

What Are the Most Common Mistakes in a 7% (7.4% APR) Market?

• Shopping with an old preapproval instead of one based on today's rate
• Negotiating only on price when credits and buydowns can lower the payment more
• Looking at the purchase price and ignoring the full monthly cost with taxes and insurance
• Waiting to time the rate perfectly, since no one can predict when rates will fall
• Sellers pricing from last spring's comparable sales

Frequently Asked Questions

Why did mortgage rates go above 7% (7.4% APR) in 2026?

Rates rose as inflation picked up to 3.4% and bond yields climbed. The Federal Reserve raised its benchmark rate by a quarter point on September 16, 2026, and the Freddie Mac 30 year average reached 7.03% on September 24 and 7.40% on October 8.

Did the Federal Reserve raise interest rates in September 2026?

Yes. On September 16, 2026, the Fed raised the federal funds target range to 3.75 to 4.00%, its first increase since 2023.

How much more can a higher mortgage rate change your monthly payment?

On a larger mortgage, the difference between a lower rate and a higher rate could be $500 or more per month. Ask a lender to compare actual rates, terms and total housing costs.

Should I still buy a home when mortgage rates are above 7% (7.4% APR)?

It depends on your budget, timeline, and goals. Inventory is at its highest level since 2014, which gives buyers more choices and negotiating power, including seller credits for rate buydowns. If the payment fits comfortably and you plan to stay several years, buying can still be a smart decision.

Will home prices drop in the Seattle area because of higher rates?

No one can predict prices with certainty. In September, King County's median price was unchanged at $850,000 while inventory grew. Many buyers are finding leverage through credits and concessions rather than large price cuts.

What should sellers do when mortgage rates rise?

Price from current comparable sales, consider a seller credit toward a buyer's rate buydown, highlight any assumable low rate loan, and prepare the home thoroughly so it stands out among more listings.

What is the housing market like in King and Snohomish County right now?

It is more balanced than it has been in years. King County had 4.70 months of inventory and Snohomish County had 3.85 months in September, with pending sales down and buyers gaining negotiating room.

Ready to Talk Through Your Numbers?

Whether rates have you rethinking your purchase or wondering how to position your home for sale, I would love to walk through real numbers for your situation.

Wherever you are in your home journey, you don’t have to have everything figured out before reaching out. I also help people connect with trusted, carefully vetted real estate agents across the country when their plans take them beyond my local area. If you have questions, would like to talk through your options, or need an introduction to an agent in another area, I’d be glad to connect. We can take it one step at a time. You don’t have to do this alone. I’m here to help.

Phone: 425.954.5622

Email: Cheryl@CherylDillonRealEstate.com

Website: CherylDillonRealEstate.com

Cheryl Dillon is a licensed REALTOR® in the state of Washington with eXp Realty.

* Rates shown are national averages for illustration, not a loan offer. A loan’s APR will be higher. Ask a licensed lender for your rate and APR.