Why 7% Mortgage Rates Still Feel So Heavy – Even as the Economy Improves

Credit to The Truth About Mortgage – few explain the housing market better. Their recent piece, 7% Mortgage Rates Are Back Again Despite Lower Inflation and Tariff Relief, hits a nerve with a question many homeowners and homebuyers are asking:  

"Why are rates still high when inflation is easing?" 

It’s a fair question – and one we hear often at Takara. 

The article points to rising Treasury yields and persistent uncertainty. But we think the story runs deeper. This isn’t just about sentiment – it’s about structural dysfunction. 

It’s Not Just the Economy – It’s the System 

Imagine buying a home in 2021 with a 2.75% mortgage. Today, that same home would cost 7% to finance. Would you sell and move? Probably not. You're “locked in”. 

This isn’t just an individual decision – it’s a national gridlock.  

The lock-in effect keeps people in place even when life demands a move: a job in another city, a growing family, or the need to downsize. As mobility declines, so does inventory. Supply stays tight, prices stay high, and yes – 7% feels worse.  

Why It Doesn’t Have to Be This Way 

We’re often asked: “Is this just how the U.S. mortgage system has to work?” Actually – No. 

Other countries have already solved this problem, and the solutions can be implemented in the U.S. today. 

In countries like Denmark, borrowers can refinance without penalties or even sell their mortgages back into the market at a gain when rates rise. That flexibility benefits both households and lenders. 

It’s a better system – and it inspired us to build DREAM. 

DREAM is a mortgage payoff program that helps homeowners exit low-rate loans without impairing lenders, unlocking mobility and liquidity in a stuck market.  

What the Article Got Right 

What we loved about The Truth About Mortgage piece is its blend of data and empathy. It connects inflation, Treasury yields, and the mortgage rate spread – but more importantly, it acknowledges the emotional reality. 

People aren’t spreadsheets. They’re families trying to make smart decisions in a market that doesn’t make sense. 

So, What Now? 

At Takara, we don’t believe in waiting for rates to magically drop or for the Fed to fix it all. We don’t think waiting for real estate to cool down is a strategy, and besides – families sometimes can’t wait. Life happens. 

The market needs new tools – like DREAM – that give people options even when rates stay elevated. 

Because let’s be honest: 

7% might be the new normal. 

The question is – how do we help people move forward anyway?