When Patrice De La Ossa’s son was accepted to her alma mater, the University of Arizona, she wanted to give him something she herself hadn’t had: a college degree without student loans. So she sold her house in Phoenix and moved with him to Tucson, closer to campus, to save on room and board. The measure meant giving up a 2.25% mortgage for a 6.8% loan. But De La Ossa thought it was temporary. Rates would drop soon, he thought, and he could refinance with a monthly payment closer to what he had before. More than four years later, his son graduated. De La Ossa continues to pay 6.8%. She is not alone. In the early years of the pandemic, mortgage rates fell below 3% and many homeowners refinanced their loans to lower their monthly payments. But late last year, for the first time since the pandemic, more homeowners had a mortgage rate above 6% than one below 3%, according to a Redfin analysis of FHFA data. The average 30-year fixed mortgage rate, the most popular type of mortgage loan in the United States, has largely hovered above 6% for four years, even above 7% at times. Homebuyers who took out mortgages during that period may have hoped rates would drop enough to refinance with cheaper loans. Instead, the relief they were counting on remains out of reach. De La Ossa, who works for an education company, pays nearly $900 more per month for this mortgage than for his home in Phoenix, even though the two loans are nearly identical. The difference between a 3% mortgage rate and a 6% mortgage rate equals hundreds of thousands of dollars in interest payments over the life of a mortgage loan, on top of the principal amount borrowed. She is frustrated by how much of her monthly payment goes toward interest, especially as she continues to pay off her doctoral student loans. If mortgage rates don’t drop enough for her to refinance soon, De La Ossa said she may have to consider moving. In addition to a corporate job in education, Patrice De La Ossa has begun taking on side jobs, like selling second-hand clothes, to make his mortgage payments. – Courtesy of Patrice De La Ossa “It’s $900 every month that I’m not going to save so that my son can one day have a house, I can’t even take a vacation anymore. Now I have a second job just to survive. And that company is earning $900 more in interest,” he said of his mortgage brokerage. This year there was a brief window of hope. Mortgage rates, which tend to track the 10-year Treasury yield, fell as inflation appeared to be returning to the Federal Reserve’s 2% target. For homeowners hoping to refinance, it looked like the break they’d been waiting for. Then the United States and Israel launched joint attacks on Iran and rates changed course. On Thursday, the average 30-year mortgage rate hit 6.71%, a new high for the year, according to Freddie Mac. CNN spoke with a half-dozen homeowners hoping to refinance. Nearly all of them shared the same frustration: With recent rate changes, they feared their refinancing plans could be delayed for years. ‘Date the rate’? Many financial advisors say it’s worth refinancing a home loan if you can lower the interest rate by at least one percentage point. It doesn’t make sense for most mortgage holders to refinance at current rates unless they find themselves in very specific situations, such as needing to consolidate credit card debt or finance a home renovation, said Daryl Fairweather, chief economist at Redfin. Refinancing applications have remained low in years when mortgage rates rose above 6% again, according to the Mortgage Bankers Association. At first, David Belmonte, an entrepreneur who owns a masonry business in East Moriches, New York, thought he had a good handle on his mortgage. The rate was a high 7.2% and the monthly payment was about $6,000, but he figured it wouldn’t last forever. When he bought the house three years ago, his mortgage broker had given him advice that was common among housing professionals at the time: “Date the interest rate, marry the house.” The idea was simple: A house is a long-term commitment, but the mortgage rate you start with doesn’t have to be. If rates go down, homeowners could refinance. Now, the phrase seems outdated. “That’s not the case anymore,” Mary Lee Blaylock, president of Coldwell Banker Affiliates, told CNN. Buyers should buy a home expecting to live with the mortgage rate they get, he said. For Belmonte, that rate has become even harder to bear as his business has been hit by uncertainty around the immigration crackdown. Three of his six employees stopped working for him, including one who was briefly arrested by immigration officials. Belmonte said that while the employees had legal documents, they feared additional immigration raids. With half of his workforce gone, he said jobs are taking longer to complete. Your income has become less predictable. “It delays projects, it jams the schedule,” Belmonte said. “Less work, less money.” He had counted on being able to refinance once mortgage rates dropped. Instead, you’ve found yourself struggling to make payments on the loan you already have. “I really thought the rates would go down, at least that was the plan. Now I feel stuck and I got such a high rate,” he said. “Even if it went down to 5%, you’d be saving a lot of money.” Moving is not a realistic escape. He needs enough space for his wife, daughter and three sons, who live with him. At 59, he says he often jokes that maybe he can retire at 97. “We hardly go out anymore. We try not to drive if we don’t have to with high gas prices. We do what we can, but it sucks,” he said. “I used to make a good living.” For more CNN news and newsletters, create an account at CNN.com
