Andrew Shilling at MarketWatch looked at buyers taking a mid-6% mortgage now with a plan to refinance later, sometimes called dating the rate. The average 30-year fixed was 6.47% when the piece ran, which is high by recent memory and ordinary by history; rates peaked above 18% in the early 1980s.
My view: the buy now, refinance later strategy only works if you can survive the gap between now and later. Nobody knows when later is. A buyer who can only afford the house if rates fall within two years is not buying a house. They are making a rate bet with their home as the stake.
On cash reserves, I want to see three things before we call it a safe purchase. Six to twelve months of expenses left over after closing, not before. True liquidity, meaning money in accounts you can reach without selling investments at a loss or borrowing. And a payment at today's rate that fits the budget with room to spare, so the refinance becomes a bonus rather than a rescue.
If those three hold, buying at 6.5% and refinancing when the opportunity comes is a reasonable plan. If they do not, the right move is to keep renting and keep saving until the purchase works without help from the Fed.
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