The New Rate Normal: Why 3% Mortgages Aren’t Coming Back
- tylergkoski
- Oct 15
- 4 min read
1. Intro: Why 3% Rates Aren’t Coming Back
For two years, Portland buyers have been waiting for the same miracle: a return to 3% mortgage rates. The logic goes like this—rates went up, rates will come down, and when they do, affordability will return.
But here’s the hard truth: 3% was an anomaly, not a baseline.
That ultra-low period followed the post-financial crisis years and pandemic-era intervention, when the Federal Reserve Bank cut the federal funds rate to near zero and loaded its balance sheet with trillions in bonds. It was never normal monetary policy.
Today’s environment looks different:
Borrowing costs are structurally higher.
The real natural rate (r-star) is trending upward, not down.
Global price pressures from energy, food, and supply chains are sticky.
Other major economies are also resetting to higher long-term interest rates.
The conclusion is simple: the new rate normal has arrived, and it doesn’t include 3%.
2. Data Support: What JLL and CBRE Are Saying
Two of the largest global real estate firms—JLL and CBRE—have already reframed their outlook. Their latest mortgage rate forecasts align on a key point:
Mortgage rates may ease modestly with slower inflation and incremental Fed rate cuts, but structural factors keep them elevated compared to the 2010–2020 decade.
JLL’s Q2 report highlights that the “lowest share” of U.S. homeowners in history are willing to move, precisely because their loans are anchored to pandemic-era lows.
CBRE’s analysis shows a sustainable pace of transactions emerging around 6%–6.5% mortgage rates, which they describe as the “new normal levels.”
In other words, the floor has shifted. While headlines obsess over every Fed cuts rates announcement, the institutional perspective is clear: we are not going back.
3. Investor Impact: How the Best Players Are Already Adapting
If you want to see the future, watch the best investors.
Large real estate firms, pension funds, and private equity managers aren’t sitting around waiting for the Congressional Budget Office or the Fed’s mortgage rate news. They’re adapting in three key ways:
a) Building Around the Spread
Sophisticated investors accept that the new normal spread—the gap between Treasury yields and mortgage rates—is sticky. Rather than waiting for it to close, they price deals assuming current mortgage rates are the baseline.
b) Playing Off Variability
Institutions track the Mortgage Rate Variability Index to time entry points. Volatility creates tactical windows for well-prepared buyers, even when the national average interest rate remains elevated.
c) Focusing on Structure, Not Headlines
Instead of chasing “low level” rates, investors are structuring capital with high-yielding accounts, alternative financing, and private credit. They understand that lending growth depends on adaptation, not nostalgia.
The lesson? Winners don’t wait for “normal” to return. They define it.
4. The Mindset Shift: Stop Waiting, Start Winning
For everyday buyers and sellers in Portland, the bigger challenge isn’t financial—it’s psychological.
The belief in a “rate reversal” is powerful. It ties directly to current self vs. past self thinking: if you bought in at 3%, you assume others will get that chance again. If you missed it, you cling to the hope that it will come back.
But behavioral science and economics agree: time perception shapes behavior. Waiting for a past condition to reappear is a losing strategy.
Here’s the reality buyers need to embrace:
6% climbs are not shocking—they are the new baseline.
Long-term interest rates reflect a new global equilibrium, not a temporary spike.
The federal reserve bank is shifting back to normal monetary policy, not emergency intervention.
Even if the Fed announces an interest-rate cut or two, it won’t unwind the structural floor under rates.
In other words: stop waiting. Start structuring.
5. The Grand Union Strategy Layer: Reframing Rate Thinking in Portland
At Grand Union, our advantage is simple: we don’t just track mortgage rate forecasts. We reframe how clients think about them.
Here’s how:
a) From Short-Term Chasing → Long-Term Planning
Instead of hoping for a quick Fed cut or a “return to 3%,” we plan for a sustainable pace of financing. That means stress-testing deals at today’s current mortgage rates and building in flexibility for refinancing only if—and when—conditions allow.
b) From Fear of Borrowing Costs → Structural Leverage
We help clients treat borrowing costs as one input among many. Grant layering, equity utilization, and deal structuring matter more than one-quarter-point change in the federal funds rate.
c) From Headlines → Process
Most agents repeat mortgage rate news from the wire. We go deeper—reading JLL, CBRE, and even congressional budget office projections to map how macro shifts flow down to Portland neighborhoods.
d) From Nostalgia → Discipline
Our core belief: discipline beats prediction. The buyers who succeed in Portland aren’t the ones who guess the bottom—they’re the ones who adopt institutional discipline in their own decisions.
6. Conclusion: The New Rate Normal Is Already Here
The market isn’t waiting for 3%. It’s already moving at 6%.
Mortgaged U.S. homeowners are anchored to their low pandemic rates. New buyers are entering at today’s levels. Institutions are structuring deals around the new normal levels—not waiting for the “low r-star rate” world to come back.
For Portland buyers and sellers, the real danger isn’t high rates—it’s lost time. Every month spent waiting is a month of missed negotiation windows, missed equity growth, and missed opportunities to pressure-test the right property.
At Grand Union, we help clients move from wishful thinking to structural planning. Because the truth is simple:
3% isn’t coming back. The new rate normal is here.
👉 We’ll show you how to stop losing time to a market that won’t reverse. Let’s build your strategy today.
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