Rates hit a three-year high. Here’s what that means for your move.
A quick read on where mortgage rates are, why more buyers are asking about adjustable-rate loans, and what is happening right here in Chapel Hill.
By Karen Miller
in The Rate Report
- Average 30-year fixed rate (Freddie Mac)
- 7.4%
- Highest since November 2023. A year ago it was 6.27%.
- Share of applications for ARMs
- 10.5%
- Up from 8.4% in mid-September.
- Purchase applications
- −4%
- Week over week. Total applications fell 2.7%.
Why buyers are looking at ARMs
The math is simple: right now an adjustable-rate mortgage (ARM) starts lower. In the Mortgage Bankers Association’s latest weekly survey, the average 5-year ARM was 6.54%, compared with 7.50% for a 30-year fixed. That gap is pulling more buyers toward ARMs than at any point in the past year.
An ARM locks your rate for an opening period, commonly 5, 7, or 10 years. After that, the rate resets on a schedule (often once a year) based on a market index plus a set margin, within limits written into your loan.
Waiting for rates to drop may not pay off soon. Fannie Mae’s latest forecast expects 30-year mortgage rates to average about 7.5% throughout 2027. Rates move with inflation and the bond market, which can shift quickly, so it is worth knowing all your loan options now.
What the gap looks like in Chapel Hill
The median single-family home in Chapel Hill sold for $785,000 in September. With 10% down, that is a loan of about $706,500.
30-year fixed at 7.5%
$4,940/mo
5-year ARM at 6.54%
$4,484/mo
Try these numbers in the mortgage calculator, and change them to fit your own move.
An ARM may fit if you
- Expect to sell or relocate before the fixed period ends
- Want more room in your budget during the first few years
- Expect your income to grow, or have savings set aside for a higher payment later
Go in with eyes open
- Your payment can rise after the fixed period, sometimes significantly
- Refinancing later depends on future rates and your finances. It is never a sure thing.
- Ask your lender for the caps: first adjustment, yearly, and lifetime
Meanwhile, close to home
Buyers in Chapel Hill have noticeably more to choose from than they did a year ago.
- Homes on the market in September
- 378
- Up 44% from 262 a year ago.
- Months of supply in September
- 4.2
- How long current listings would last at today’s pace of sales.
Single-family homes and townhomes combined.
By property type, single-family homes and townhomes tell two different stories.
| Median sale price | Average days on market | |
|---|---|---|
| Single-family homes | $785,000 up from $690,000 | 45 days up from 38 |
| Townhomes | $464,990 down from $487,581 | 43 days up from 21 |
Single-family homes: Values are holding up, but homes are taking about a week longer to sell. Buyers have a little more time to decide, and well-prepared listings still stand out.
Townhomes: This segment has cooled the most. Prices are slightly lower and homes sit about twice as long, which can give buyers more room to negotiate.
There’s more than one way to make the numbers work
In today’s market, buyers, sellers, and their agents are working together on creative solutions to get to the closing table. On the financing side, the right loan depends on how long you plan to stay, what payment feels comfortable now and later, and where you want to be in five years.
Whether you are thinking about buying or selling, I’m happy to walk through your options and connect you with a lender I trust to run the numbers for your situation.