Open Door Lending LO says affordability, not rate hopes, is now driving purchase decisions
The latest jump in 10-year Treasury yields – which have just hit their highest level since January 2025 – could prove grim news for some homebuyers now facing the prospect of higher mortgage rates than they had first expected.
But plenty of buyers who spent much of the past two years in a holding pattern waiting for a rate cut are increasingly willing to move forward now, according to Kristin O’Neil (pictured top), senior loan officer at Open Door Lending.
She told Mortgage Professional America many mortgage shoppers were determined to push ahead with a purchase even despite wider economic turbulence and fears of higher rates fueled by a new escalation in the war in the Middle East.
“I would actually say that my clients are less rate-sensitive than they were at the start of the year, and it’s a really interesting shift,” O’Neil said. “For the last few years, a lot of buyers were stuck in this pattern of ‘Let’s wait for the next quarter’ or ‘Let’s see what happens at the next Fed meeting. Let’s wait to see if rates get cut.’
“But I think more people are starting to realize, ‘We can’t keep waiting on a rate drop that may not come, at least not anytime soon.’”
On Thursday morning, US Treasury yields climbed as oil prices rose, with traders also reacting to a slump in weekly claims for unemployment insurance.
Home prices outweigh rate worries for buyers
Freddie Mac said the average 30-year fixed mortgage rate climbed to 6.58% in the week ending July 23, up from 6.55% seven days prior but still lower than the same time last year when the average rate clocked in at 6.74%.
O’Neil, though, said the more immediate pressure on buyers is coming not from the bond market, but from still-climbing home prices and worsening affordability across many markets.
“Home prices haven’t paused for anyone,” she said, citing figures from Cotality’s national Home Price Index which showed 0.8% annual growth and 1.6% three-month momentum in its most recent reading. The company sees 4.8% appreciation looking ahead to next spring.
“The buyers who’ve been waiting are watching the price side of the equation move against them just as much as the rate side,” O’Neil said. “That combination, no guarantee on rates, and prices that keep climbing are what’s finally pushing people off the sidelines.”
Average rates shot towards the mid-sixes after a brief early-year dip into the fives – and while a return to a five-handle is often viewed as the likely spark to a much busier market, few are expecting that to happen between now and the end of the year.
Refinancing plans give way to payment comfort
For O’Neill, the shift in buyer psychology has also changed how she structures loans from the outset, particularly for clients who came in expecting rates to fall quickly enough to refinance within months.
“We try to be really strategic with the buyers we work with,” she said. “A lot of people were counting on refinancing within six months to a year and haven’t been able to. My goal is always to set my clients up for success, not just short-term but long-term too.
“So I want them to be genuinely comfortable with their payment today. If rates drop later and refinancing makes sense down the road, great – that’s a bonus, not the plan.”
A “buy now, refinance later” strategy gained popularity earlier in the current rate cycle, when many assumed the Federal Reserve’s cutting cycle would bring mortgage rates down within a year or two.
With the pace of Fed policy now less certain thanks to firmer inflation data, rising energy costs, and the hawkish approach of new chair Kevin Warsh, loan officers like O’Neil say qualifying buyers on the rate available today, rather than a hoped-for rate tomorrow, has become the most responsible course.
That means focusing less on timing a rate window and more on locking in genuine affordability at today’s numbers, treating any future refinance as upside rather than the foundation of the deal.
Another factor is also focusing buyers on a move, instead of moving them off the sidelines: the fact that supply remains tight across many markets. “We simply don’t have enough inventory,” O’Neil said, “and that’s continued to build pent-up demand regardless of what rates do week to week.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
