Rates Are Higher, But Stay In The Game!

The big story this week is mortgage rates breaking through 7%. Freddie Mac’s average 30-year fixed rate jumped to 7.03% on Thursday, the first time it has crossed 7% in 20 months, since January 2025. That’s up from 6.95% the week before and 6.30% a year ago, while the 15-year fixed rose to 6.42% from 6.26%. The climb has been steady. Rates have risen in 6 of the last 8 weekly surveys and are now 0.37 points higher than four weeks ago. It’s a sharp reversal from earlier in the year. Rates briefly fell below 6% by the end of February, then shot back up after the war with Iran unsettled bond markets and prolonged inflation worries. Bond yields are driving much of it. The 10-year Treasury approached 5.1% midweek, a 19-year high last seen in April 2007. In practical terms, on a median $416,000 home with 20% down, this week’s rate means a principal-and-interest payment of about $2,221 a month.

Higher borrowing costs are showing up in buyer behavior. Cotality’s September report, released Wednesday, found that contract cancellations are rising while pending contracts are falling as affordability strains the market. National prices are roughly flat, but that hides a lot of variation underneath. U.S. home prices rose just 1.4% year over year in July, yet 46 of the 100 largest metros posted monthly declines. Supply-constrained markets in the Northeast and Midwest are still seeing price growth, while several high-supply Sun Belt and Western markets are adjusting more sharply. Refinancing has dried up. Elevated rates are keeping refinance opportunities scarce and pushing some borrowers toward ARMs for payment relief.

Overall, the balance of power keeps tilting toward buyers, even if many aren’t acting on it yet. CNN Business reported this week that the market is subtly shifting in buyers’ favor, but many are still reluctant to move. Realtor.com’s early-September data showed active inventory up 4.2% from a year earlier and the median listing price down 1.4% to $419,000. A true crash still looks unlikely, largely because existing owners have so much equity. Average borrower equity was $310,000 in Q2 2026, and only 2% of mortgage borrowers are underwater. The investor picture is also shifting. Institutional investors that own 1,000 or more homes bought 2.2% of single-family homes in August, up from a low of 1.4% in February, after the ROAD to 21st Century Housing Act gave them regulatory clarity.