Although mortgage rates peaked at 8% in late 2023, they remain relatively elevated at about 6.5%. But some members of the younger generations continue to bank on mortgage rates dropping in the near future, even as real estate experts have warned that hope is “unrealistic.”

In fact, a new survey of 1,000 Americans by San Francisco-based mortgage tech provider Truework shows a whopping two-thirds of recent younger homebuyers are gambling their financial futures away on hopes for a major mortgage-rate drop in the next three years. They’re taking on adjusted-rate mortgages (ARMs) at a lower rate or plan to refinance in the future. ARMs typically start with a lower initial monthly payment, but the rate adjusts periodically based on a market index, plus a margin. 

“These temporarily lower rates drove them to buy homes that they would otherwise struggle to afford on a fixed rate, leaving them financially stretched and emotionally stressed,” Truework cofounder Victor Kabdebon told Fortune. “In an uncertain environment, they can become a financial ticking time bomb.”

The problem with ARMs and refinancing in today’s economy

While betting on ARMs or future refinancing can help certain homeowners break into the housing market sooner, it doesn’t always mean it’s the best long-term financial decision for all borrowers. 

Sometimes an ARM will require a refinance to avoid the rate going up, but market conditions may not be favorable, Phil Crescenzo Jr., vice president for the southeast division at Nation One Mortgage Corp., told Fortune.

“The client must accept whatever the adjustment is according to their mortgage terms, which creates uncertainty for the homeowner,” he said. To be sure, there are instances in which refinancing can be beneficial if the current mortgage rate happens to be lower than when you originally took out the loan. 

Melissa Cohn, regional vice president of William Raveis Mortgage, added that homeowners who take out an ARM should “always be prepared for the worst-case scenario.”

Meanwhile, those who plan to refinance in the future may be disappointed to hear that economists and housing market experts don’t expect a meaningful decrease any time soon.

“There is no guarantee that rates will drop in the future,” Cohn, who has more than 40 years of mortgage experience, told Fortune. “We have been hoping that mortgage rates will drop for a while now, and they have not.”

Therefore, millennials and Gen Z could potentially be getting themselves into a very sticky situation if they’re planning to use an ARM or refinance in the future, according to Truework.

“Buyers banking on mortgage rate drops is risky because they are betting on something that they cannot control,” Kabdebon said. “Buyers’ mortgages shouldn’t be a gamble, but a safe investment they make for bettering their families’ lives.”

Will mortgage rates drop soon?

While Federal Reserve Chair Jerome Powell signaled last week he’s open to a rate cut in September, that doesn’t mean mortgage rates are destined to drop enough to make housing more affordable for Americans. 

A recent Zillow study showed even a 0% mortgage rate wouldn’t budge housing affordability in several major U.S. metros, and economists and other housing market experts aren’t optimistic mortgage rates will drop significantly. Plus, mortgage rates increased last fall along with the 10-year Treasury yield, even as the Fed began cutting rates—and history could repeat itself this year.

While there’s a “good chance of mortgage rates dropping in the future,” Kabdebon said, there’s still “no telling how much the drop will be.” Plus, housing affordability is also controlled by home prices, which are historically high, and wages still haven’t met pace with home-price growth. 

“The real question is ‘how much is enough’ for people in vulnerable financial situations?” Kabdebon asked. “Are people betting on a 5% handle? 4% handle? 3% handle to feel relief?”

Time will tell, but the recent memory of sub-3% mortgage rates still makes today’s rates feel out of reach.