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7 Tactics to Beat High Mortgage Rates

Matthew Levy Updated: August 3, 2023 • 5 min read
mortgage rates

Potential homeowners were sitting comfortably just a few short years ago, with mortgage rates at all-time lows. Even during the pandemic, the housing markets surged. And with interest rates rushed to zero to spur the economy, the dream of owning a house was as obtainable as ever. Fast forward to today, and things are significantly different. Trading Economics says the average contract interest rate for 30-year fixed-rate mortgages is 6.87%, compared to 5.74% a year earlier and around 3% in 2022. We’ll explore various tactics to help you stay ahead of these high mortgage rates and attempt to make your home-owning dream a reality. 

How to Get the Best Interest Rate on a Mortgage

Below we will look at several possibilities to lower your rate, each with its own set of advantages and disadvantages. Many factors, such as your financial stability, housing needs, and long-term plans, will be at play. Let’s dive in to explore how each might help serve your unique circumstances. 

Use Mortgage Discount Points

One technique that has gained popularity involves mortgage discount points, often known as “buying points.” Each mortgage point represents 1% of your mortgage amount. By purchasing points, you pay an upfront fee to lower your interest rate throughout the loan’s tenure.

  • Benefits: The primary benefit is the potential long-term savings. If you plan to live in your home long-term, the savings from the lower rate may significantly outweigh the initial expense. You can also benefit from lower monthly payments, enhancing your cash flow and providing more financial flexibility. 
  • Drawbacks: If you plan to relocate or refinance early in the term, the upfront cost may not offset the temporary benefits of reduced monthly payments. Analyze your future plans and financial trajectory before deciding to buy points. 

Make a Larger Downpayment

This is a simple one. Increasing your downpayment is another effective strategy to mitigate those higher mortgage interest rates. A larger downpayment shrinks the loan size, resulting in lower payments and less total interest paid over the life of the mortgage. 

  • Benefits: In addition to the reduced payments, it can also boost your chances of approval from the lending institution. Simply, it lowers the lender’s risk. Another benefit is potentially eliminating the need for private mortgage insurance, which can further reduce costs. 
  • Drawbacks: With a substantial upfront cash requirement, your savings may be strained. 

Consider an Untraditional Mortgage

Unconventional mortgage types like those offered by the Federal Housing Administration (FHA), Veterans Affairs (VA), the United States Department of Agriculture (USDA) loans, and Adjustable-Rate Mortgages (ARMs) may offer relief from high rates. 

  • Benefits: These loans usually offer lower interest rates or down payment requirements, broadening homeownership access. These loans can be a stepping stone, particularly for first-time buyers or those with less traditional income sources.
  • Drawbacks: Each loan type carries unique eligibility requirements or potential challenges. For instance, ARMs may tempt with lower initial rates, but they can rise substantially over time, potentially affecting your long-term financial health. 

Opt for a Shorter Mortgage Term

Choosing a shorter mortgage term, like a 15-year term over a 30-year term, can secure a lower interest rate.

  • Benefits: Opting for shorter can lead to significant interest savings over the life of the loan. You will also be mortgage-free faster. 
  • Drawbacks: Clearly, something has to give. Your monthly payments will jump considerably with a shorter term. This may squeeze your budget, limiting your financial freedom for the loan term. Ensure you have the funds available to cover the cash flow crunch before committing to the shortened term. 

A strong credit score will help you attain favorable mortgage rates.

Improve Your Credit Score

A strong credit score will help you attain favorable mortgage rates; there is no way around it. Your credit score is a measure of your creditworthiness, which is a critical point for lenders in assessing your risk profile. 

  • Benefits: A high credit score has multiple benefits. It communicates to lenders that you’re a low-risk borrower, which allows them to offer you lower interest rates. Practicing strong financial habits - consistently paying your bills on time, keeping your credit card balances low, not applying for credit unnecessarily, and correcting inaccuracies on your credit report - can bolster your score. 
  • Drawbacks: Improving your credit score takes time. You need to sustain financial discipline over the years, and if your credit is already low, to begin with, it may take longer to elevate it higher. Lower credit scores = higher mortgage interest rates. 

Shop Around and Make Lenders Compete for Your Business

Make sure to shop around at several institutions, including large banks, small banks, credit unions, and any local options you may have. The range of interest rates different lenders offer can vary significantly, so do your due diligence. 

  • Benefits: Shopping around for rates ensures you secure the best deal for your situation. You may even want to enlist the services of a mortgage broker, as they can alleviate some of the legwork for you.
  • Drawbacks: Time investment is the main drawback of this method. And while a mortgage broker can assist in finding favorable rates, they typically charge a fee for their service. Think of the fee as an additional interest cost when factoring in the mortgage. 

Take Over Your Seller’s Mortgage

Sometimes it is possible to assume your seller’s mortgage, although it is uncommon. When the seller’s interest rate is much lower than the market rate, it can be extremely lucrative for you to do so. 

  • Benefits: You can save on the mortgage interest rate, but you may also secure savings on closing costs with this method. In addition, the time to close the sale could be shorter as certain aspects of the original loan, like property appraisal, might not need to be completed.
  • Drawbacks: Not all loans are assumable, and even if the seller’s loan is, the lender must approve your takeover. Moreover, the home’s sale price must align closely with the mortgage balance. 


With mortgage rates on the rise, navigating the homeownership market strategically is essential. Explore some of the techniques mentioned above to secure your loan's lowest possible mortgage interest rate. Even in a higher interest rate environment, the dream of owning your home is possible - it just might take a bit more work than a few years ago. Happy hunting!



Should I lock in my mortgage rate?

Locking in your mortgage rate can provide certainty and protect against future rate hikes. Think of it like insurance against interest rate volatility. However, it goes both ways - if rates decrease, you won’t be able to take advantage of them. Ultimately, this will depend on your comfort level regarding risk, financial flexibility, and analysis of current market trends and conditions. Consulting with a financial advisor or mortgage expert may provide more personalized advice for your situation.

How high can mortgage interest rates go?

Many people forget that in the 1980s, mortgage rates peaked at 18.63% in October of 1981. So while today’s high mortgage rates are relatively higher than just a few years ago, there is still a possibility of higher. Of course, many economic factors influence interest and mortgage rates, including inflation, the health of the housing market, and federal monetary policy. Given the complexity, it’s challenging to predict future peaks, whether we will see higher or lower mortgage rates, and how high or low they can go.

What is the best way to shop for mortgage rates?

If it were easy, everyone would do it. The best way will likely be multifaceted, starting with thorough research. It would be smart to compare rates from a variety of lenders by either contacting them directly or using online platforms. Looking at smaller local banks or credit unions may also be in your best interest, as sometimes they can offer better rates than larger national or multinational banks, given their expertise in the area. Another option is to hire a mortgage broker, as they have relationships with numerous lenders and can save you time by doing the comparison shopping for you (although this usually comes at a cost).

What is considered a high mortgage rate?

A high mortgage rate is a relative term, largely depending on current market conditions and historical trends. While a 6% mortgage is high today, in the 1980s, that would have been considered an extremely good deal. The low-rate environment of the last decade has conditioned the thinking that anything above 5% might be considered high. Thus, evaluating mortgage rates compared to current average rates and overall financial and economic context is more important. Remember to check in on current rates and market predictions to help you assess what is more likely to happen so that you can find the best mortgage interest rates today.

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Written by Matthew Levy

Matthew is a freelance financial copywriter with 14+ years in financial services. He holds a Bachelor of Science degree in Economics with business and finance options and is a CFA Charterholder. He is from Vancouver, Canada, but writes from all over the world.